June 2010 Archives

While most Americans nowadays are struggling like never before just to keep their heads above water, television viewers are still treated to a seemingly bottomless well of free-spending reality "stars," as Wall Street Journal blogger Robert Frank wryly observes.

But, he asks, are they really rich or just living on borrowed time?

Not Teresa Giudice, the "Real Housewives of New Jersey" cast member who lived like royalty but recently filed for Chapter 7 bankruptcy protection. Two "clear signs she may not have been the savviest of financial planners," the writer points out, are her penchant for gold furniture and the fact that she had a party planner named "Elvira."

A sweeping jobs bill in the U.S. Congress recently was voted down along party lines (GOP lawmakers were opposed), which means the state now faces an additional $375 million budget hole, the Washington Examiner reported. Perhaps even worse than the news of the Georgia deficit is the roughly 7,000 jobless Georgians who will lose unemployment insurance (UI) benefits each week.

And since job growth remains elusive in the Peach State, it could equate to even more business for Georgia bankruptcy lawyers as the UI lifeline ends for many.

In addition to other measures intended to spur job growth and stimulate the economy in the wake of the worst recession since the Great Depression, the bill would have extended jobless benefits for another six months and also would have extended Medicaid stimulus.

Perhaps it's not such a simple explanation, but would the finances of Personna American Safety Razor Co. have gone dull if more men were gainfully employed and shaving every day? Described as one of the world's largest makers of shaving razors in a Reuters article, the company may file for bankruptcy as early as this week.

Unnamed sources purportedly close to the talks told Reuters reporters that there's a plan on the table to sell the company to Swiss bank UBS, its main lender.

Since US bankruptcy law is the same no matter where you reside, Georgia bankruptcy lawyers could better explain how a company filing for Chapter 11 bankruptcy protection can broker a sale during proceedings.

Struggling consumers often turn to professional debt settlement firms for help, who know which questions to ask creditors and have proven strategies for negotiating debt. The last thing creditors want is for their debtors to be relieved of their debts with the help of Atlanta bankruptcy lawyers.

But consumers may also choose to settle their own debts. Debt settlement firm Debtmerica Relief provides a step-by-step guide for a more DIY approach.

No, this isn't a headline from the satirical newspaper The Onion. Cricket farming is a legitimate business that supplies food for reptile owners, zoos and theme parks.

But the Chapter 7 bankruptcy filing of Lucky Lure Cricket Farm in Leesburg, Fla., reported by The Wall Street Journal's bankruptcy blog, wasn't a result of low reptile demand born out of the recession. Actually, Mother Nature is to blame.

A virus for which there is no known cure swept through the farm and caused the cricket colonies to collapse, ultimately forcing the operation to shutter its operations. Although businesses typically file Chapter 11, Atlanta bankruptcy lawyers could better explain why a business would opt for a Chapter 7 liquidation instead.

Just when things were starting to look a little brighter for financially struggling Atlantans, the Georgia Dept. of Labor reported anemic job growth and a slight increase in unemployment for the month of May, the Atlanta Journal-Constitution reported.

And while May's 9.9 percent unemployment rate for the metropolitan Atlanta region is just 0.1 percent higher than April, the upward movement is anything but encouraging for distressed job seekers. About 7,000 Georgia residents lose their unemployment insurance (UI) benefits each week.

For many households, it puts them that much closer to needing Georgia bankruptcy lawyers.

U.S. lawmakers are closing in on passage of a bill that will, among other measures, create the Consumer Financial Protection Bureau, as reported by the Los Angeles Times. The legislation, which many critics say doesn't go far enough, is expected to be approved  by both houses before the July 4 recess.

The main intention of the bill, as well as the new agency, is to protect consumers from predatory lending practices and ultimately reduce the number of consumers needing bankruptcy attorneys in Atlanta and elsewhere.

Harvard professor Elizabeth Warren, a bankruptcy and consumer law expert, led the opposition to the 2005 law that made it more difficult for consumers to file for bankruptcy protection, according to a USA Today article and Q&A.

Often the only thing preventing a household from slipping into the red and filing for bankruptcy is job security, a reality that has been heightened during the so-called "Great Recession." So even if current job openings are weak, it pays to get ahead of the curve.

The hope is that new jobs will be created throughout the Atlanta area before things get any worse. For those already weary of their situation, Georgia bankruptcy lawyers usually provide free initial consultations for prospective new clients.

A new report on job trends by Georgetown University's Center on Education and the Workforce, which includes a breakdown for Georgia (PDF), offers a glimpse of what to expect, as reported in the Atlanta Journal-Constitution. 

One of the first things a debtor must do before filing for bankruptcy protection is decide whether to file Chapter 7 or Chapter 13. While Chapter 7 bankruptcy protection will eliminate nearly all of your debts but you must pass what is known as a "means test," as a USA Today article explains. 

The means test came about after the passage of a 2005 bankruptcy reform law, making the process much more restrictive. Atlanta bankruptcy lawyers can walk you through the means test if you're unsure, but there are plenty of online resources to help you decide.

As a rule of thumb, debtors with a decent job often are required to file for Chapter 13 bankruptcy protection, in which a portion of your income is used to pay some or all of your debts. But if you qualify for Chapter 7, debts such as child support, most tax bills and student loans must still be paid.

There is plenty of debate as to whether disgraced oil conglomerate BP will go out of business as the ongoing deep-sea oil gusher threatens fragile ecosystems and the livelihoods of thousands of Gulf residents. Meanwhile, historical data from The Wall Street Journal shows just how quickly shares of BP stock have sunk to new depths since the incident. 

Financial guru Jim Cramer, the host of CNBC's investment show "Mad Money," said recently that he believes bankruptcy is "very much on the table" for BP. The company's roughly $7 billion in quarterly cash flow is not enough to sustain the company, he believes.

The Federal Bureau of Investigation recently completed what it called the broadest mortgage fraud sweep in history, according to an FBI press release. "Operation Stolen Dreams" targeted perpetrators of mortgage fraud throughout the US, involving 1,215 defendants and netting 485 arrests.

Fraudsters often file fraudulent bankruptcy petitions, according to the FBI's latest mortgage fraud report:

"[Perpetrators would file] fraudulent bankruptcy petitions to delay the foreclosure process and extract the maximum profit from victims during the commission of advance fee, fractional transfer, and sale-leaseback-repurchase foreclosure rescue schemes."

The ongoing debt crisis plaguing countless U.S. households presents lucrative opportunities for companies that promise debt relief, as discussed in a New York Times Article. But not all debt relief firms are legitimate or have the best interests of debtors in mind.

Reporters begin the article describing the conspicuous lavishness of a recent convention by the U.S. Organizations for Bankruptcy Alternatives (USOBA) at the oceanside Four Seasons Resort in Palm Beach, Florida:

At a well-lubricated evening reception, a steel drum band played Bob Marley songs as hostesses in skimpy dresses draped leis around the necks of arriving entrepreneurs, some with deep tans.

Credit card marketplace CreditCards.com published an article on debt mix-ups, which it said are common, and how to clear your name when someone else's debt ends up on your bill or is otherwise attached to your identity. A debt collector may make a typo or accidentally go after a debtor whose name is similar to yours, for example.

But you don't want to just ignore the mistakes and risk a damaged credit score. If in doubt, an Atlanta bankruptcy lawyer can help you determine how to clear your name. But the following five tips are a good start:

Filing for Chapter 7 or Chapter 13 bankruptcy protection is always one way for consumers buried underneath a mountain debt to get relief, but it should be considered the final option. Before shopping around for a bankruptcy attorney in Atlanta, it pays to consider your options first.

FindLaw provides a list of four general recommendations for consumers burdened by a heavy debt load and facing insolvency:

In Atlanta and around the country, an increasing number of households are struggling to pay bills, often with diminished salaries or diminutive unemployment insurance checks. An article in Crain's Cleveland Business explores the state of the recession from the perspective of nonprofit Consumer Credit Counseling Service.

Jay Seaton, Cleveland-area president of CCCS, said the volume of clients coming in for help has leveled off but that most of the cases are alarmingly severe:

"We're seeing a significant chunk of people who can't stretch their income, are unemployed and at some point they're going to reach out to an attorney and consider filing for bankruptcy."

While Georgia's unemployment rate remains higher than the national average (10.4 percent in April), the state has benefited from the addition of more than 16,600 new jobs in the last fiscal year, according to the Atlanta Journal-Constitution. 

Much of the new job growth can be attributed to an active business recruiting campaign by the state that has netted around 275 business relocations or expansions to the state. Roughly $3.4 billion has been invested by those companies during the last fiscal year, according to the state's economic development agency.

So while countless households and local businesses still struggle to avoid the need for Georgia bankruptcy lawyers, the increased economic activity is encouraging news.

Former Taylor, Bean & Whitaker Mortgage Corp. chairman Lee Farkas has been charged with running a fraud scheme that attempted to steal nearly $2 billion from the federal government's Troubled Asset Relief Program (TARP), Bloomberg Businessweek reported.

The case has been closely followed by bankruptcy attorneys in Atlanta and elsewhere, since revelations that Lee Farkas skimmed more than $50 million from Taylor Bean surfaced during the company's Chapter 11 bankruptcy filing, as we wrote about last month. Taylor Bean, based in Florida, was once the largest mortgage lender in the United States.

But $50 million is pocket change compared to the alleged $1.9 billion fraud scheme federal prosecutors say the embattled former executive perpetrated against the government. The indictment claims he "sought to deceive financial firms and TARP by covering up shortfalls at his closely held mortgage lending company."

Arthur Marshall, one of the best high school football players from the Augusta area who played for the University of Georgia and professionally for the Denver Broncos, was sentenced to 69 months in federal prison for financial fraud, The Augusta Chronicle reported.

His 2009 indictment on federal charges followed the 2008 Chapter 11 bankruptcy filing of his business, Custom Contractors, which listed roughly $11 million in liabilities.

The Georgia bankruptcy lawyer who handled his case did not speak to reporters for earlier articles about the Custom Contractors bankruptcy.

San Diego is several thousand miles away in Southern California and a world away from Atlanta. So why should Georgians care that San Diego residents and city administrators are talking about bankruptcy protection as a remedy for its budget woes, as discussed in a Bloomberg Businessweek article?

Like a growing number of U.S. municipalities including San Diego, Atlanta also is in serious financial dire straits. Estimates differ as to the exact amount of Atlanta's budget deficit, but the recent layoffs of 100 city employees and plans for another 200 or so, as reported by WSB News, speaks volumes.

You don't have to consult with a bankruptcy attorney in Atlanta, or anywhere else for that matter, but an article by the consumer advocacy organization LoanSafe.org insists that legal representation is crucial to a positive outcome.

Filing for bankruptcy protection hurts your credit score, limits future borrowing and often spurs unintended consequences. But even though everyone who files for bankruptcy as a consumer is tight on cash, the federal laws and compliance issues surrounding the procedure usually require skilled hands.

And although bankruptcy is governed by federal courts, the article points out that having an attorney well-versed in the intricacies of your resident state can prevent costly mistakes.

Despite a growing plume of speculation that embattled oil giant BP might file for bankruptcy in an attempt to shield itself against mounting costs, a New York bankruptcy lawyer told Bloomberg Businessweek the company would still be on the hook for most of the tab. 

Georgia bankruptcy lawyers, who are much closer to the damage in the Gulf of Mexico, might also have some thoughts about this. But the attorney interviewed for the article said that while a BP bankruptcy could halt some claims, it wouldn't shield the company from most cleanup costs and damages.

The first thing one must consider before filing for bankruptcy protection is to ask a bankruptcy attorney in Atlanta whether or not you're "judgment-proof," according to a USA Today article. Judgment-proof, as personal finance adviser Gerri Detweiler explains, means you don't have any assets to give creditors or collection agencies:

"That means there is nothing they can get from you if they sue you or take you to court."

And if you're determined to be judgment-proof, you have the right to tell creditors and collection agencies that you've consulted with a lawyer and have no assets. If they continue to call or otherwise harass you, they are in violation of the law.

Dallas-based movie rental chain Blockbuster Inc. is trying to secure $150 million in cash as it struggles to keep the lights on and faces a possible Chapter 11 bankruptcy filing, Bloomberg Businessweek reported. Also known as "debtor-in-possession" financing, it would be one option to help stave off a bankruptcy filing.

The way it would work is that Blockbuster creditors would forgive some of the company's $900 million of debt in exchange for equity. It's not clear how an eventual bankruptcy filing would affect creditors holding equity instead of debt, but a bankruptcy attorney in Atlanta could better explain.

Blockbuster maintains at least 30 stores in the Atlanta area, so a bankruptcy resulting in store closures would further impact the city's already distressed job prospects.

The Georgia Supreme Court denied a request by Atlanta bankruptcy lawyer Michael J.C. Shaw for voluntary suspension, according to The AM Law Daily. The former associate with law firm Greenberg Traurig billed $493,000 under an assumed name.

Between 2003 and 2009, he used the name of an independent investigator when billing bankruptcy clients but he performed the services himself out of the firm's Atlanta office. He also performed title examinations and other services under two additional fake names.

Greenberg promptly terminated his employment upon hearing about the scheme and reported him to the Georgia Bar.

Miamisburg, Ohio-based Dayton Superior Corp. has opened a brand-new $15 million manufacturing and distribution facility in Braselton, just 40 miles northeast of Atlanta, according to the Dayton Business Journal. The concrete company emerged from Chapter 11 bankruptcy protection last fall.

The plant has hired 90 employees for its first year of operation and plans to add an additional 50 jobs in the second year, which is welcome news for unemployed workers in and around the Atlanta area.

The collapse and subsequent Chapter 11 filing of storied investment bank Lehman Brothers in September 2008 was the largest bankruptcy filing in US history, as reported by The New York Times. The Times article called the day of the filing "one of the most dramatic days in Wall Street's history," which also included the $50 billion sale of Merrill Lynch to Bank of America.

Lehman's bankruptcy filing listed more than $613 billion of debt after burning the midnight oil to find a buyer. Bad real estate investments and dubious derivative holdings ultimately did them in.

Sounds like perfect fodder for television drama, right?

Don't break out the champagne just yet, but metropolitan Atlanta's housing market finally is showing some real signs of improvement, according to an article in the Atlanta Journal-Constitution. A number of experts who spoke at a recent Atlanta Housing Market Summit offered some promising perspectives along with more concerns about future uncertainties.

But first the good news.

The number of first-time buyers has increased over the past few months, even hitting historical levels for Atlanta's housing market, said SmartNumbers president Steve Palm and his associate, John Hunt. A resurgence of new homeowners, they said, means the market is at least stabilizing.

The New York Times published an article about recent speculation by investment bankers that oil and gas giant BP may have a blowout of its own following the ongoing oil spill disaster in the Gulf of Mexico. Cleanup costs, lawsuits and loss of productivity may sink the multinational corporation, many say.

Credit Suisse estimates that cleanup costs alone could run as high as $23 billion. And BP already has lost more than one-third of its stock value since the Deepwater Horizon suffered a catastrophic failure, sending millions of gallons of crude oil into a sensitive marine ecosystem.

The stated intention of the 2005 bankruptcy law backed by credit card companies was to prevent abuse of the system, USA Today reminds us in a recent article. At the time, bankruptcy filings reached a record of 2 million.

University of Illinois law professor Robert Lawless says the number of filings could hit 1.7 million this year. But Katherine Porter, associate professor of law at the University of Iowa, said she believes it could be much worse:

"It's shocking that we are back to the 2005 level. And the filing rate doesn't even begin to count the depth of the financial pain."

Chapter 7 bankruptcy protection indeed offers indebted consumers an opportunity for a financial "do-over," but it's often an experience that creates stress and resentment.

So it's refreshing to see "Real Housewives of New Jersey" star Teresa Giudice and her husband, Joe Giudice, come to terms with their own bankruptcy filing, as covered by the New York Daily News. She told People Magazine (as quoted by NY Daily News) that this is a personal matter but wanted to clear the air before any distortions are aired:

"What is true is that due to the economy, most of my husband's real estate ventures failed despite his hard work and effort. As a result, we looked to the Bankruptcy Court for a fresh start."

Countrywide Financial Corp., the home mortgage lender bought by Bank of America, agreed to pay $108 million in a settlement over claims it charged excessive fees for struggling homeowners, Bloomberg Businessweek reported.

Federal Trade Commission Chairman Jon Leibowitz told reporters that for a large home loan company to charge "illegal and excessive fees" is inexcusable. Most of the allegedly illegal fees were claimed in bankruptcy proceedings, he said, where services such as inspections and lawn-mowing would be inflated 400 percent.

More than 1,200 so-called "Build America Bonds" (BABs) totaling $107 billion have been sold since last year as part of the larger American Recovery and Reinvestment Act, according to Bloomberg Businessweek. They were intended to help struggling municipalities survive the worst recession since the Great Depression.

But Bloomberg commentator Joe Mysak wonders if the bonds will backfire due to unforeseen borrowing costs, eventually leading to Chapter 9 bankruptcy protection for several U.S. counties and cities.

The U.S. Supreme Court ruled yesterday that bankruptcy courts may account for changes in a debtor's financial fortunes when determining repayment of debts in Chapter 13 proceedings, the Courthouse News Service reported. Justice Antonin Scalia was the lone dissenter.

Below is the high court's holding, as written in the opinion by Justice Samuel Alito (PDF):

When a bankruptcy court calculates a debtor's projected disposable income, the court may account for changes in the debtor's income or expenses that are known or virtually certain at the time of confirmation.

Reuters reported that the daily pace of U.S. bankruptcy filings is the second-highest since 2005, based on data released last Thursday by Automated Access to Court Electronic Records (AACER). The 133,459 U.S. bankruptcy petitions filed in May is a 10 percent increase over May of last year.

But while 16 percent of bankruptcy filings in 2010 have been in the populous state of California, Georgia had the second-highest number of bankruptcies on a per-capita basis. Number one is Nevada, which along with California felt much of the pain from the collapse of the real estate market. 

Prospective investors in a new Atlanta venture that promises to help people whose homes are in danger of foreclosure are balking after learning about its past dealings in Augusta, The Augusta Chronicle reported. The so-called "foreclosure rescue" business founded by Marie Champagne, S.D.A. & Associates, went bankrupt when the real estate market collapsed.

As a result, more than 40 Augusta homes went into foreclosure, 12 households had to retain Georgia bankruptcy lawyers and investors lost $3.7 million.

The National Hockey League has been running the Phoenix Coyotes team ever since the professional hockey team filed for Chapter 11 bankruptcy protection last year, according to a Wall Street Journal blog entry. But the NHL recently said it has no intention of being a long-term owner and set a deadline of Dec. 31 for new ownership.

According to the Arizona Republic, the NHL wants the city of Glendale, Arizona, which owns the Coyotes' arena, to reach an agreement with new team owners. The stakes are high, since the league said it has a "bona-fide offer from a viable purchaser" who plans to move the team to another market.

City Manager Ed Beasley assured City Council that he sees no reason why a new buyer couldn't be found by June 30. City officials also have proposed a special taxing district around the arena (as well as the nearby football stadium) to help pay for the team's expenses.

Paying back student loans has never been easy. But with today's dismal job market and the still-rising cost of a university education, more graduates than ever are feeling stuck between a rock and a hard place.

New York University graduate Cortney Munna, profiled in a New York Times column, is a case in point. She has nearly $100,000 in student loan debt but has been enrolled in night school since graduating five years ago in order to put off paying the monthly installments (students can defer payment).

Meanwhile, interest continues to pile up.

But any bankruptcy attorney in Atlanta or elsewhere would tell graduates that there's a very slim chance of discharging student loans through a bankruptcy filing should things truly get out of hand.

As we've discussed before, federal law protects debtors from harassing, threatening or misleading calls from collection agencies. The Fair Debt Collection Practices Act provides a way for those abused by collectors to file complaints and even sue, as FindLaw explains.    

While filing for bankruptcy should be considered your last option for debt relief, Atlanta bankruptcy lawyers know how to deal with debt collectors who engage in unfair debt collection practices.

But a case from Texas covered by ABC News illustrates just how nasty some collection agencies can be; and for this particular individual, who was harassed by a caller from Advanced Call Center Technologies, justice was finally served.

Perjury is always a serious crime, which according to FindLaw occurs when someone knowingly lies in court or through legal documents after taking an oath to be truthful.

But as any Atlanta bankruptcy lawyer will tell you, committing perjury in a bankruptcy case can land you in the slammer. USA Today reported that Peter Plockington, former owner of the Edmonton Oilers hockey team, has pleaded guilty to perjury in bankruptcy fraud case.

In exchange for his plea, he avoids what may have been a 10-year prison term. Instead, Peter Plockington (also known as "Peter Puck") is expected to receive probation at his sentencing hearing scheduled for August.

Atlanta Journal-Constitution columnist Jay Bookman explains how public employees in Atlanta and Georgia in general will likely face some pain in the not-too-distant future. City and state treasuries have been running on fumes for the past few years, which means pension benefits and even job security, will have to reevaluated.

Most notably, as the columnist points out, Atlanta Mayor Kasim Reed has stated the need for pension cuts and layoffs. As Mayor Reed puts it, benefits will have to be cut in order for the city to avoid bankruptcy. 

Meanwhile, public and private sector workers are rightly worried about the prospect of needing Atlanta bankruptcy lawyers if fortunes should reverse.

In other words, there's always someone left holding the bag when the economy is so bad that few bright spots are on the horizon.

Small businesses are inherently risky and any entrepreneur will tell you that it takes substantial personal sacrifice. That means business partners often put their own "skin in the game," whether it's savings, credit card debt or home equity.

But what happens when your business partner becomes personally tapped out and retains the services of an Atlanta bankruptcy lawyer?

A NorthJersey.com reader asked that very question, which was answered by the publication's in-house business advice columnist. The reader and his partner are 50/50 shareholders in a corporation but the partner has filed for bankruptcy and said he wants nothing more to do with the business.

Former professional basketball star Antoine Walker joins a long list of former well-paid athletes who have gone bankrupt, Crain's Chicago Business reported. The final straw for the three-time NBA all-star was a $2.3 million foreclosure lawsuit on a suburban Chicago mansion he bought for his mother.

Somehow he wasn't quite able to properly invest the $110 million he earned over 13 seasons in the NBA, including a short stint with the Atlanta Hawks. One of Antoine Walker's secured creditors is Atlanta-based SunTrust Bank, which gave him a mortgage on his Miami home.

But he is not being represented by a bankruptcy attorney in Atlanta, as he filed for Chapter 7 in the US Bankruptcy Court in Southern Florida. He played for the Miami Heat for most of his career and was let go by the Memphis Grizzlies in 2008.

Atlanta households and individuals who fall behind financially to the point they need help often call an Atlanta bankruptcy lawyer and file for Chapter 7 or Chapter 13 protection. It was thought of as a way for troubled debtors to get a fresh start in life.

But new research by the National Bureau of Economic Research suggests that the tougher 2005 bankruptcy law reforms actually have forced more people into mortgage default and foreclosure, according to Housing Watch.

A CNN article from 2005 about the new changes explains how declaring bankruptcy provided better exemptions for home equity. Essentially, the amount of equity that was protected from creditors was determined by your state of residence; this usually was more favorable for consumers.

It is terrible when debt collectors call. The calls typically make someone who owes outstanding debts feel very powerless and at the very least, embarrassed. But do you know your rights?

Federal law prohibits debt collectors from using a number of tactics considered harassing or threatening, according to FindLaw. While threats of violence are illegal in any context, a debt collector may not threaten your reputation, use profane language, and make repeated phone calls just to annoy you, put you on a "shame list" or other such actions.

Debt collectors also are prohibited from misrepresenting your debt amount, falsely imply that he or she is an attorney or make other false or misleading statements.

In other words, as any bankruptcy attorney in Atlanta would attest, they must adhere to laws meant to keep things civil and fair.