August 2010 Archives

The Wall Street Journal's Bankruptcy Beat blog reported on a new study from the American Bankruptcy Institute Law Review concluding that consumers pay substantially more to file for bankruptcy following the 2005 changes to the law.

And it's not just consumers, according to the study's authors.

Increased costs and time spent on Chapter 7 and Chapter 13 filings following passage of 2005's Bankruptcy Abuse Protection and Consumer Protection Act also are passed onto trustees, creditors and even Atlanta bankruptcy lawyers.

 Just getting by in this ravaged economy without slipping into deeper and deeper debt is difficult enough as it is. But according to a lawsuit filed by California Attorney General Jerry Brown, television's "Tax Lady" Roni Deutch has swindled millions of dollars from customers across the country, as reported by CBS MoneyWatch.

Her tax relief service is not the only one being targeted as a shady scam, as countless Atlanta bankruptcy attorneys  most likely have clients whose debts became even worse after contacting unscrupulous firms.

Atlanta Mayor Kasim Reed urged Georgia Gov. Sonny Perdue to trim the state's workforce and channel some of the savings back into education, according to the Atlanta Journal-Constitution. He pointed out that Atlanta cut its city workforce from 9,654 in 2008 to 7,500 this year, "And we haven't gone far enough."

But Sonny Perdue said the state already is working with a skeleton crew, although he realizes Georgia needs to trim the budget somehow. Meanwhile, the state's unemployment rate remains high at 10.3 percent for June and many residents are just a pink slip away from needing Atlanta bankruptcy lawyers.

The great thing about bankruptcy is that it wipes out most consumer debts and gives individuals and households a fresh start, well sort of. In reality, those who file for Chapter 7 or Chapter 13 bankruptcy protection have to work their way back to a respectable credit profile, as discussed in a Wall Street Journal article.

The WSJ article offers eight credit-repair tips consumers should consider once they walk out of their Atlanta bankruptcy lawyer's office.

The average consumer credit card debt dipped to its lowest level in more than eight years, according to an Associated Press story published by the Huffington Post. The data comes from credit reporting agency TransUnion.

Since heavy credit card debt is one of the main reasons consumers become insolvent and in need of an Atlanta bankruptcy lawyer, this certainly is good news. But it also shows that consumers are spending less, which negatively impacts chances of a broader economic recovery.

It may have just a sliver of the fan base enjoyed by the National Football League, but the Arena Football League is back after emerging from bankruptcy in December 2009, according to the Atlanta Journal-Constitution.

That means Duluth's Gwinnett Arena will soon see the return of hometown AFL team the Georgia Force, which was active between the years of 1987 and 2008. And according to the team's Web site, single-game and season tickets are now available for the 2011 season.

So if you're an arena football fan, you may want to thank the Georgia bankruptcy lawyers who helped broker the team's resurgence.

Nearly half of all individuals filing for bankruptcy protection in 2007 were between the ages of 45 and 64, according to a study published by the American Bankruptcy Institute's ABI Journal and cited by The Wall Street Journal.

Specifically, people generally lumped into the Baby Boomer generation accounted for 42 percent of bankruptcies during that year. More recent statistics were not available but a bankruptcy attorney in Atlanta could probably provide some anecdotal insight.

Think college education for your kids will cost an arm and a leg? It might, but often a child's first four years of day care cost even more for families where both parents must work in order to make ends meet.

And while scholarships and federal grants are available for aspiring university-bound students, the same cannot be said for early childhood education, often considered crucial to an individual's future success. A Macon Telegraph article explores this dilemma Georgia's struggling households, as well as the child care providers themselves, often face.

Most Georgia bankruptcy lawyers would probably tell you that their typical clients are households where both parents work outside the home; these are families that typically pay for child care.

Not surprisingly, the often-shady debt settlement companies promising 50-cents-on-the-dollar relief plans on late-night television are not succumbing to tough new federal regulations without a fight, as MSNBC's Red Tape Chronicles blog explained. In fact, consumers should expect a barrage of ads right up until the rules take hold late next month.

Simply stated, new rules intended to protect debtors taking effect on Sept. 27 will not guarantee that those using debt settlement firms won't also need the services of Atlanta bankruptcy lawyers.

Former credit counselor Steve Rhode, who now runs a consumer information site called GetOutOfDebt.org, said a "flurry" of TV and radio ads should be expected. But beyond that, some critics fear that a few of the less-scrupulous firms will exploit at least one potential loophole left by the Federal Trade Commission's new rules.

According to a 12-page report entitled "Women, Debt and the Recession," summarizing a study by CareOne Debt Relief Services (PDF), a significantly growing number of women are seeking assistance for heavy household and business debt.

Among the findings, the study found that otherwise-savvy, professional women are particularly vulnerable to debt problems, as reported by ABC News. While not all of them are seeking out a bankruptcy attorney in Atlanta or elsewhere, this is the first time so many professional women have been saddled with so much debt. 

Robert Negrelli, a 65-year-old former Alpharetta real estate broker, pleaded guilty to federal charges of making false statements related to his 2005 bankruptcy case, the Atlanta Business Chronicle reported.

It's not clear whether or not his Atlanta bankruptcy lawyer knew about the discrepancies, but good attorneys usually inform their clients about the risks of making false statements in court. 

At the time, Robert Negrelli owned a real estate company called Negrelli Realty that specialized in high-end houses in the Alpharetta area. Federal prosecutors had accused him of falsely stating that his income in the two years prior to his Chapter 11 filing was only $81,000. He later admitted that he earned much more income through Negrelli Realty.

College students and recent graduates attempting to jumpstart their careers face one of the toughest job markets in decades. Most of those who took out federally backed student loans, which are nearly impossible to discharge in bankruptcy court, are losing even more sleep.  

But new changes under the recently enacted Health Care and Education Reconciliation Act of 2010 may provide some relief when student loan payments become all-consuming, according to the California-based Press-Enterprise.

The article provides an excerpt from the standard debt-collection letter sent to student loan holders who have defaulted:

"The U.S. Department of Education holds one or more past due, legally enforceable, defaulted student loans or grant claims for which you are responsible ..."

General Motors looked it was on the brink of liquidation a little more than a year ago before it filed for Chapter 11 bankruptcy and was bailed out by the US government, which is now the majority shareholder. But things are looking up for the automaker, which according to the Associated Press filed its S-1 paperwork for an initial public offering (IPO) of stock.

As would any company filing for an IPO, GM outlined its reasons for going public and the risks to prospective shareholders in its 700-page filing with the Securities and Exchange Commission. Atlanta bankruptcy lawyers who work with corporations no doubt are following the news, as it may provide some insight into the investing public's appetite for risk.

So much for the economic recovery. The Associated Press has reported that unemployment insurance (UI) claims hit their highest level last week in nine months. And when jobless numbers rise in Atlanta and elsewhere, so does the demand for Georgia bankruptcy lawyers.

More than 500,000 Americans applied for UI benefits last week, the only time weekly claims have hit the half-million mark since last November. Being the third straight week that first-time jobless claims rose, the AP suggested that the private sector may report a net loss of jobs in a month for the first time this year.

Georgia's unemployment rate dropped slightly in July to 9.9 percent, according to CBS Atlanta, which is still high but a tad lower than the 10 percent jobless rate reported in June.

Atlanta bankruptcy lawyer Michael Rethinger told the Atlanta Journal-Constitution that most cases he has seen in the past couple of years involve divorce, unemployment and/or mortgage problems. But many of his clients also carry heavy credit card debt, most often for basic necessities:

"When you talk about credit card debt, people think it affects people who shopped a lot; that's not necessarily the case. The credit card debt I'm seeing is mostly people using their cards to survive when they are out of work."

Sometimes debt collectors trying to contact someone who actually owes money call the wrong person, often with the same or similar name. But as a Washington Post article explains, collection agencies often are not as concerned about such mistakes as they are with simply collecting the debt.

In other words, at least according to the Federal Trade Commission and countless consumers, some debt collectors know they have the wrong person but persist anyway. This is often referred to as "debt-tagging."

It's illegal of course, and an Atlanta bankruptcy lawyer could better explain the laws, but most often the recipient of such a call just hangs up. And the debt collector could always claim they made a mistake and contacted the wrong person. 

Maybe "Real Housewives of New Jersey" star Teresa Giudice was doing the rest of us a favor when she reportedly went on a $60,000 shopping spree immediately after she and her husband filed for Chapter 7 bankruptcy protection, as reported in US Magazine.

Because that is a textbook example of what not to do when faced with bankruptcy or otherwise drowning in debt. It doesn't take an Atlanta bankruptcy lawyer to understand that.

An article in the Los Angeles Times discusses how the Federal Trade Commission's new rules governing debt-settlement firms may protect consumers. Attempts at debt-settlement often come before calls to the Atlanta bankruptcy lawyer, even though attorneys probably would advise would-be clients to avoid such firms. 

Many of the problems with debt-settlement firms have to do with promises that are too good to be true. In fact, debt-settlement companies have been in the crosshairs of at least 250 federal and state false-advertising cases in the last few years. These firms also have been the source of thousands of consumer complaints.

Perhaps the only thing more frustrating for jobless Americans is news of corporations reporting strong quarters and deep cash reserves but which aren't hiring, as explained in an Atlanta Journal-Constitution article. After all, what good is a Wall Street recovery if Main Street continues to suffer from high unemployment?

It may be cold comfort for Atlantans who already have been forced to call Georgia bankruptcy lawyers due to lack of work, but this is the typical pattern for economic recoveries.  

Georgia lost 357,888 jobs since the recession began in 2007, according to US Bureau of Labor Statistics data cited by the Journal-Constitution. Roughly 8 million jobs were shed nationwide since the beginning of the Great Recession and unemployment remains stalled at 9.5 percent. In Georgia, it's still at 10 percent.

While General Motors has been in the news the most lately, including a Reuters article about its exit from bankruptcy was followed by a positive earnings report and a planned initial public stock offering. And let's not forget that taxpayers own the Michigan-based car company, even though we shouldn't expect much in return.

But as Chrysler eyes an exit from Chapter 11 bankruptcy protection itself, the carmaker's tab is pushing $85 million for attorney and adviser fees, according to the Wall Street Journal's Bankruptcy Beat blog. And while we don't technically "own" Chrysler the way we do GM, taxpayers will end up paying for that $85 million tab.

Chrysler's bankruptcy proceeding is particularly large and complex, so an Atlanta bankruptcy lawyer could better explain how it's playing out.

Once high-flying movie rental chain Blockbuster Inc. said it is struggling to service its $919.6 million of debt and was given a six-week reprieve by increasingly anxious creditors, according to Bloomberg News. Many observers say it is only a matter of time before the company files for bankruptcy.

Blockbuster recently reported a $69 million loss and a 20 percent sales decline for the second quarter. Even company spokeswoman Patricia Sullivan has acknowledged Blockbuster's potential sale of assets to buyers, either in or out of bankruptcy court:

"We've been transparent throughout this process about the potential sales or licensing of certain international operating assets. These discussions are ongoing."

The Atlanta Journal-Constitution reported that the Hindu Temple of Georgia, which filed for Chapter 11 bankruptcy protection last fall, agreed to drop lawsuits against seven former worshippers for alleged defamation of temple guru Annamalai Annamalai.

In exchange, the seven former temple-goers agreed to drop claims filed in bankruptcy court totaling $400,000. The guru, also known as Dr. Commander Selvam, was arrested in Gwinnett County two years ago for credit card fraud and practicing medicine without a license.

The temple's nine-acre property in Norcross was slated for foreclosure after defaulting on a $2.3 billion loan. But it was put on hold when the temple filed for bankruptcy, according to an earlier Journal-Constitution story. As any bankruptcy attorney in Atlanta would tell you, bankruptcy often halts foreclosure proceedings, at least temporarily.

The Wall Street Journal reported earlier this week about a New Jersey couple, Joseph and Diane Bryski, that continues to make payments on their son's private student loans. While that may not be so unusual, what's odd about this story is that the borrower, Christopher Bryski, died four years ago.

Fortunately the family has been able to keep up with the now $518 monthly payments. But countless Atlanta families may also be in the same situation and facing the prospect of having to call an Atlanta bankruptcy lawyer for help. 

Christopher Bryski fell five feet and suffered severe brain injuries while climbing a tree in 2004; he went into a coma, which transitioned into a persistent vegetative state. He was one year away from graduation and had taken out $49,500 in student loans to attend Rutgers University, $5,000 of which were federal loans.

Proposed higher education cuts that will result in fewer college instructors, shortened library hours and fewer courses from which to choose were approved by the State Board of Regents earlier this week, the Atlanta Journal-Constitution reported.

Cuts in education may ultimately undermine the state's ability to rise above sky-high rates of joblessness, foreclosures and household bankruptcies. And as a bankruptcy attorney in Atlanta would tell you, student loan debts generally cannot be discharged in bankruptcy proceedings.

The Atlanta Journal-Constitution reported that The Sea Island Co., which owns the legendary Cloister hotel and other upscale resorts along the Georgia coast, has filed for Chapter 11 bankruptcy protection. The company also announced its sale to a pair of out-of-state investment groups.

But vacationers were told by CEO Bill Jones that business will go on as usual at The Cloister, The Lodge and its other clubs, spas and golf courses.

The company owes 30 creditors at least $60 million, according to documents prepared by Sea Island's Georgia bankruptcy lawyers. In total, however, the company owes both secured and unsecured creditors between $500 million and $1 billion.

A recent opinion piece in Forbes about President Obama's legislatively enacted Consumer Financial Protection Bureau, a consumer financial watchdog agency, comes out in opposition to the nomination of Harvard professor Elizabeth Warren as its head.

But aside from the writers' opinions, they mention that US lawmakers are once again considering the Medical Bankruptcy Fairness Act; they oppose the bill because they believe it is based on flawed research. The legislation would help personal bankruptcy filers more easily discharge debt related to high, unforeseen medical expenses.

Just because the option for a creditor to file suit for an unpaid credit card or loan balance (expired debts) has passed the statute of limitations doesn't mean debt collectors can't try, according to a recent New York Times article.

But learning about the law or speaking with an Atlanta bankruptcy lawyer certainly can help give you an edge.

Creditors work with debt collection agencies, which get a cut of what they bring in, when debtors are past due. Debt collectors have more leverage when the shadow of a legal action is present; but claims that have run past the statute of limitations for lawsuits routinely are sold on debt collection Web sites for pennies on the dollar.

The British tabloids are all a-flutter over what many say is the inevitable bankruptcy of Duchess of York Sarah Ferguson, as reported by Associated Content and various other news outlets. But how on earth does a member (albeit, an estranged member) of the Royal family go broke?

While Atlanta bankruptcy lawyers may not be well-versed about the intricacies of the UK's bankruptcy laws, British financial adviser Richard Sorksy made it sound like a much simpler procedure across the pond:

"It's a simple civil court procedure costing around £500 [about $800 USD] which will enable her to walk away from every single penny of her debt. If your assets are of a lesser value than your debts and if your income is not great enough to meet your expenses, it's generally a good option." 

Despite Georgia's stubbornly high unemployment rate and above-average raft of personal bankruptcy filings, Atlanta Journal-Constitution's Biz Beat blog offers a rare silver lining to the persistent storm clouds. Seems as though several banks are confident that Atlanta will rebound and offer lucrative investment opportunities.

This is the viewpoint offered by an article published in American Banker, which reported that several prominent banks (including JPMorgan Chase & Co.) announced plans to open branch offices throughout the Atlanta area. They're betting that this is the low point, marked by double-digit unemployment and a frenzy of activity by Atlanta bankruptcy lawyers.

While JPMorgan said it plans to open 35 new Atlanta branches in the next two years, Regions Financial Corp. is planning to move its new regional headquarters downtown. A number of smaller banks also are getting busy in the area by purchasing failed banks from the Federal Deposit Insurance Corp.

Regular readers of this blog know that student loan debt typically cannot be discharged through the bankruptcy process. It has become such a big problem lately, since recent university graduates with student loan debt are struggling to kick-start their careers in an anemic job market.

In fact, a US News article cites government data stating that more than 20 percent of students who took out private student loans in the past three years have defaulted. It's not totally impossible to discharge student loan debt in bankruptcy but a bankruptcy attorney in Atlanta can best assess your unique situation. 

Be forewarned: Anyone who's working with an Atlanta bankruptcy lawyer to put their own financial life back together will groan when they hear about a new iPhone application (or "app") that donates one cent to the Save Teresa Fund each time a user checks in to the sponsoring site's "Real Housewives" page, as reported by Fox News.

The star of Bravo's "Real Housewives of New Jersey" and husband Joe Giudice filed for Chapter 7 bankruptcy protection and are auctioning off the contents of their 10,000 square-foot, 16-room mansion. She said all she can do is "rise above it" and said she's grateful for her family and her health on her Bravo blog.

The good news is that the American South is doing much better than the rest of the country with respect to bankruptcy filings. The bad news? Six out of 10 of the counties with the highest bankruptcy rates just happen to be in the suburbs near Atlanta, according to a Wall Street Journal article.

Granted, bankruptcy filings still are higher in the West, especially in California and Arizona. But what is it about the Atlanta area that keeps Atlanta bankruptcy lawyers so busy?

The holding company for the quail hunting plantation of Gordon Teel Sr., former chairman, president and CEO of the now-defunct Georgian Bank, filed for Chapter 11 bankruptcy protection on July 2, according to the Atlanta Journal-Constitution. 

But that's just the latest in a string of bad fortune for the once-prominent bank chief. While Gordon Teel likely has met with his fair share of Georgia bankruptcy lawyers since Georgian Bank dissolved last year, he also has been hit with multiple civil lawsuits and defaulted on $4.7 million in debt.

He and another former bank director are the subject of shareholder lawsuits, while federal regulators may pursue a legal action to get back the nearly $800 million paid by the Federal Deposit Insurance Fund to cover its customers in the wake of its collapse. Georgian Bank is one of about 40 banks in the state that failed in the past two years; at least three of the CEOs from these banks also filed for personal bankruptcy.

After a tense auction pitting Hall of Fame pitcher Nolan Ryan's group against that of Dallas Mavericks owner Mark Cuban, the Texas Rangers team are finally out of bankruptcy court, the Associated Press reported (republished in the Atlanta Journal-Constitution).

The winning bid of $590 million went to the Greenberg-Ryan group, consisting of Nolan Ryan and attorney Chuck Greenberg. Mark Cuban's investment group bid roughly $581 million.

Andrew Leblanc, a lawyer for some of the creditors, had opposed the bankruptcy auction plan but said he was pleased with the result mainly because the bidding war resulted in a much higher sale price than expected. Atlanta bankruptcy lawyers also likely paid attention to this case as it was quite out of the ordinary.   

Since you can lose your home in as little as six weeks from the start of a foreclosure, according to an Atlanta Journal-Constitution article, the last thing you want to do is ignore the issue. You can also get up to speed on the foreclosure process at FindLaw.

The article offers the following four tips for homeowners staring down the barrel of a foreclosure:

There's more than one way to raise revenue during a personal bankruptcy. No one can accuse "Real Housewives of New Jersey" cast member Teresa Giudice of being too lazy to work; she posed for an advertisement for Sizzle Tans, according to the New York Daily News. 

While not everyone has the C-list, reality TV star power of Teresa Giudice, most Atlanta bankruptcy lawyers would probably tell their clients to find creative news ways to bring in some money after filing for Chapter 7 or Chapter 13.

While the Credit Card Accountability Responsibility and Disclosure Act of 2009 was intended to protect consumers, a Wall Street Journal article reported that many credit card companies continue to charge hidden fees and in some cases flaunt the law.

Consumers who overspent on credit, which went hand-in-hand with the mortgage boom, were crushed by sinking home prices and rising unemployment. While some were able to make adjustments, a large number of consumers sought the help of Atlanta bankruptcy lawyers.

The passage of the Credit Card Accountability Responsibility And Disclosure Act of 2009 attempted to level the playing field somewhat by increased transparency about fees and interest rate increases, as well as bringing an end to some dubious billing practices.

People often say "necessity is the mother of all invention," which could be said of an enterprising Georgia woman. Beverly Davis hopes to raise an additional $60,000 from her down-home venture in order to buy her Fairburn home out of foreclosure, as reported on The Wall Street Journal's Developments Blog.

And as far as business ventures go, it doesn't get much more Southern than this: Cornbread.

That's right, Beverly Davis sells chicken pot pies with cornbread crust, cornbread souffle, cornbread-and-skillet gift packages and even bumper stickers ("When life throw lemons make lemonade, bake cornbread and SELL it!"). And if it proves successful, she'll be able to move back into her old house and probably won't have to worry about calling a Georgia bankruptcy lawyer.

As there seems to be no end in sight to the need for Atlanta bankruptcy lawyers, it's nice to know that lawmakers are working to make sure households don't lose everything when their finances go south. But a just-passed House bill supported by the National Rifle Association, reported by Huffington Post and elsewhere, has drawn fire from critics.

The "Protecting Gun Owners in Bankruptcy Act of 2010," if also passed by the Senate and signed into law by President Obama, would guarantee that the firearms of individuals facing bankruptcy would be off limits to creditors.

Republican Ohio Representative John Boccieri introduced the bill, also known as H.R. 5827, as explained and updated by GovTrack. It seeks to add firearms to the list of other items that are exempted from repossession or liquidation in bankruptcy proceedings.

It's not quite time to exhale, as Wells Fargo Securities senior economist Mark Vitner's most recent report forecasts at least another two years of extremely sluggish economic growth throughout Georgia, the Atlanta Business Chronicle reported. Mark Vitner noted signs of improvement in the metro Atlanta area but not enough to for a full-fledged recovery.

That means Georgia unemployment offices, as well as Atlanta bankruptcy lawyers, likely will remain plenty busy for a while longer.

Atlanta and Georgia as a whole are suffering from the areas' worst recessions since the 1970s, punctuated with stubbornly high unemployment and steep real estate declines. And while Georgia's unemployment rate has fallen in two of the last three months, it's still at about 10 percent.

Consumers have every reason to be skeptical of online ads promising to save your house simply by filing for bankruptcy protection. But in many cases, it's actually true that personal bankruptcy can bring an end to house foreclosure proceedings, either temporarily or permanently, a CNN article explains. 

While Chapter 7 bankruptcy can only postpone an inevitable home foreclosure, Chapter 13 bankruptcy often can end the process permanently. If you're facing foreclosure and have insurmountable debts, ask your Atlanta bankruptcy lawyer for advice on the best course of action.

The case against disgraced investor Bernie Madoff, who swindled investors though his elaborate $65 billion Ponzi scheme, may be over; but the trustee liquidating his firm filed three lawsuits tied to the jailed con man's family in U.S. bankruptcy court, Reuters reported.

He is seeking to recover at least $30 million through his lawsuits, claiming that Bernie Madoff's family members took almost $200 million in investor cash to fund their extravagant lifestyles. As Atlanta bankruptcy lawyers would explain, a trustee is a creditor assigned to oversee his or her debtor's bankruptcy proceeding.