Home » Page 4

Posts Tagged ‘bankruptcy’

« Older Entries
Newer Entries »
Thursday, December 17th, 2009

Bankruptcy Provision Aside, Consumer Protection Passes House

Late last week, the U.S. House of Representatives voted to approve a bill that introduces a spate of consumer protection measures.

The amendment that would have permitted homeowners to address foreclosure in bankruptcy by altering the terms of mortgage loans (in what’s known as “cramdowns”), though, did not make the cut.

Provisions of the Bill

The Wall Street Reform and Consumer Protection Act, as it’s known, includes the following provisions:

  • Mortgage lending reform: The bill would outlaw the type of predatory lending that allowed for the subprime boom and subsequent bust. Essentially, the bill requires mortgage lenders to lend only what their borrowers can repay.
  • Increased consumer protection: It creates the Consumer Financial Protection Agency, a government group proposed earlier this year whose job would be to protect Americans from unfair financial practices and fraud of all stripes.
  • Amped up oversight: The Financial Stability Council, another provision of this bill, would identify firms that are intrinsically risky and increase monitoring and oversight of these to prevent widespread financial crises.
  • Bailout replacement: If this bill becomes law, taxpayer bailouts will be a thing of the past, because it includes orderly measures for closing firms that are “too big to fail.”
  • Limits on executive pay: In addition to giving regulators an opportunity to halt what seem to be questionable payment policies, the bill would give shareholders a chance to weigh in on the salaries and retirement packages of a firm’s executives.
  • Increased investor protections: The bill would increase the power of the Security and Exchange Commission (SEC) and mandate an examination of the securities industry to determine what reforms are needed.
  • Regulations on derivatives: All-new regulations would be instituted for the derivatives market, which reportedly has a value of at least $600 billion.
  • Hedge fund registration: Those who run hedge funds would have to register with the SEC and comply with regulatory guidelines to minimize risk for investors.

What Happens Now?

At this point, the bill will move on to the Senate, where it could be modified before becoming law, perhaps with a new bankruptcy amendment.

But, in the words of Speaker Nancy Pelosi, the bill “sends a message” to Wall Street and consumers about a new era of protection.

Tags: , , ,
Posted in The Law and Your Money | Comments Off

Saturday, December 12th, 2009

Personal Finance News Roundup: 12/12/2009

This week, many November numbers about money and credit were released, with some surprising findings. Here’s a summary of a few important figures.

November Consumer Bankruptcy Filings Down 18 Percent

The American Bankruptcy Institute (ABI) reports that personal bankruptcy filings decreased 18 percent last month, compared to October’s numbers. Specifically:

  • Total filings: 112,152 consumers filed for bankruptcy in November 2009, compared with 135,913 in October.
  • Increase from 2008: A year ago, in November 2008, 99,925 consumers filed for bankruptcy. This year’s figure represents a 12 percent jump.
  • Chapter 13 filings: Only 29 percent of consumers who filed for bankruptcy did so under Chapter 13 of the U.S. Bankruptcy code last month, a rate unchanged from October.
  • Yearly estimate: Sources predict that total bankruptcies in 2009 will total more than 1.4 million.
  • Rate of cyber fraud: Of all online sales, 1.2 percent were found to be fraudulent in 2009, the lowest figure recorded in the 11 years CyberSource has been keeping track.
  • Online revenue lost: This year, $3.3 billion was lost to cyber fraud, compared to $4.0 billion last year and $3.7 billion in 2007.
  • Some areas still problematic: Online sales of electronics still have fraud rates approximately double those of other retailers.

Retail Sales Drop Surprise 0.3 Percent in November

However, this figure is not considered comprehensive, and will be reevaluated after the government releases its sales data on December 11th. Still, the initial figure has some retailers worried that this year’s holiday shopping season will mirror last year’s, when many Americans were holding onto their money after the tumult of the stock market’s crash.

The retail figures, quoted in an msnbc.com article, apparently don’t include online sales, sales from electronics chains or sales from Wal-Mart Stores, Inc., three groups the government’s figures will cover.

Report: Online Fraud Down Overall

In a survey out this month on online scams, the security company CyberSource reports that web fraud has decreased by about 18 percent in the United States in Canada since 2008. Here’s a closer look at the findings:

  • Rate of cyber fraud: Of all online sales, 1.2 percent were found to be fraudulent in 2009, the lowest figure recorded in the 11 years CyberSource has been keeping track.
  • Online revenue lost: This year, $3.3 billion was lost to cyber fraud, compared to $4.0 billion last year and $3.7 billion in 2007.
  • Some areas still problematic: Online sales of electronics still have fraud rates approximately double those of other retailers.

The dip in fraud doesn’t mean you should be any less vigilant when shopping online, though. Be sure to guard your credit card numbers carefully and only shop on secure web sites!

Tags: , , ,
Posted in Economic News: How Are We Doing? | Comments Off

Thursday, December 10th, 2009

Call Your Representative and Demand Mortgage Modification in Bankruptcy

An amendment being debated in the House of Representatives could provide powerful protections for homeowners going through bankruptcy. This legislation would allow bankruptcy judges to modify mortgages in Chapter 13 cases, providing a huge benefit for everyday hardworking Americans who are facing home foreclosure. The House may start voting on this amendment as soon as today!

Please take the steps below then share with your family and friends via email, Facebook, or any way you can get the word out!

  1. Phone toll free at: 877.354.4958
  2. Put in your zip code
  3. When you reach the receptionist:
    • State your name
    • Say that you are a constituent
    • Ask the Representative to vote FOR the Conyers-Turner-Lofgren amendment (#201) to the Financial Services Reform bill.

The amendment is being fiercely opposed by the business and financial services communities. By calling your representative in support of this amendment, you can fight corporate greed and help your fellow Americans. This amendment will cost taxpayers NOTHING and will save millions of homes from foreclosure! Take action today!

Tags: , ,
Posted in Bankruptcy News and Events | Comments Off

Tuesday, December 1st, 2009

Student Loan Bankruptcy Case Argued in Supreme Court

The U.S. Supreme Court began hearing today the case involving a debtor whose student loans were discharged in a Chapter 13 bankruptcy—though possibly against the U.S. Bankruptcy Code.

Student loans are notorious for being difficult to discharge in bankruptcy, even in a Chapter 13 bankruptcy. In order to have student loan debt eliminated, a debtor must prove undue hardship.

In the case before the Supreme Court, the debtor, Francisco Espinosa, was allowed to enter a Chapter 13 plan without ever proving undue hardship to the bankruptcy court, according to a story on National Public Radio.

The Bankruptcy Case

In 1988, Espinosa was a baggage handler for America West Airlines when he began taking computer drafting classes at a technical school. Espinosa took out four student loans totaling over $13,000 from United Student Aid Funds.

After earning his degree, Espinosa was unable to find work in the computers field, and continued working at America West. However, that company was facing its own financial strain, and began cutting salaries. In 1992, Espinosa, a college graduate earning $6 an hour, filed bankruptcy.

According to the NPR story, Espinosa agreed to repay the full amount of the student loan debt through a three-to-five year Chapter 13 plan—but not the $4,000 of interest accrued on the loan. USAF was notified several times of the terms of the plan, and never objected to the case.

In 1997, the bankruptcy court declared Espinosa's debt repaid, and issued him a debt discharge.

However, two years later, USAF issued a lien on Espinosa's tax return for the unpaid interest. USAF claimed that the bankruptcy plan was illegal—11 years after the court confirmed it—because of the undue hardship requirement.

Undue Hardship Hearing Never Held

The student loan company argues that the bankruptcy court should have held a special hearing to determine whether Espinosa's situation qualified as an undue hardship, and should have summonsed USAF to appear in court. Because the hearing was never held, undue hardship was never established, and the loan should not have been dischargeable, USAF argued.

Espinosa's attorney has argued that USAF was properly notified and did not raise any objections at the time. A federal appeals court agreed.

Now it's up to the Supreme Court to decide just when a creditor can raise objection to a Chapter 13 bankruptcy plan—and when the can still collect on debts.

Tags: , , ,
Posted in Bankruptcy News and Events | 1 Comment »

Monday, November 30th, 2009

Bankruptcy Filings Rise 33 Percent in Third Quarter

The number of bankruptcy filings in the third quarter of 2009 reached their highest point since 2005, and soared 33% above the total from the previous year, according to statistics from the American Bankruptcy Institute.

Consumer and business bankruptcies filed between August and October reached 388,485 compared to 292,291 for Q3 2008. Total filings between January and October, 2009, reached 1,100,035 compared to 841,496 in the same period in 2008, and close to the total 1,117,771 bankruptcies filed in 2008.

October saw the most personal bankruptcy filings since October, 2005, when more than 600,000 consumers filed to meet the deadline before the new bankruptcy law took effect.

"The spike in bankruptcy filings for both consumers and businesses reflect the continuing effects of today's weak economy," said Samuel Gerdano, ABI executive director.

"With unemployment surpassing 10% and credit to businesses remaining tight, consumers and businesses are increasingly turning to the financial relief of bankruptcy."

Bankruptcy filings are expected to exceed 1.4 million in 2009.

Tags: , , ,
Posted in Economic News: How Are We Doing? | 1 Comment »

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.

Tags: , ,
Posted in Economic News: How Are We Doing? | Comments Off

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. Not surprisingly, Nevada also has one of the nation's highest bankruptcy rates. 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.

Tags: , , ,
Posted in Home Foreclosure | 1 Comment »

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.

Tags: , ,
Posted in Bankruptcy News and Events | Comments Off

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.

This is great news for the thousands of unemployed Americans who would possibly be nearing bankruptcy if this bill didn't pass.

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, most filed in court by bankruptcy lawyers, 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.

Tags: , ,
Posted in Economic News: How Are We Doing? | Comments Off

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 at aiccca.org) and visit the Better Business Bureau’s website at bbb.org 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.

Tags: , , ,
Posted in Predatory Lending | Comments Off

« Older Entries
Newer Entries »