The single mother's chapter 7 bankruptcy case was thrown out of court this week after she failed to file a number of documents required by the court. The paperwork included a number of financial statements by the required Monday deadline. When the deadline lapsed, the court dismissed the case on Tuesday morning.
]]> The dismissal of the case also lifted the temporary ban on the foreclosure sale of her home. While there is limited funding to pay creditors, they can begin taking action against the single mom. According to the original bankruptcy filing, her 21 creditors range from individuals, including her father all the way to local businesses like Sylvan Learning.The bankruptcy code is complex and bankruptcy court rules are strict, which is why it is vitally important to seek the assistance of an experienced bankruptcy attorney. An attorney will not only navigate the complex process for you, but ensure that no mistakes are made that could affect your bankruptcy filing. Even a small mistake can cause a delay in the process or even result in dismissal as it has for the single mother known and named for her January 2009 birth of octuplets.
Source: The Orange County Register, "'Octomom' bankruptcy thrown out of court," Doug Irving and Lou Ponsi, May 16, 2012
]]>Jeremy Mayfield's wife may have filed their Chapter 7 bankruptcy at a calculated time. The couple has a home that consists of more than 400 acres and was recently at auction for $1.725 million. The home was auctioned off to the same lender that holds the mortgage. The bankruptcy filing was filed within 10 days of the auction.
]]> The bankruptcy filing will place the closing sale on hold, which will allow the family to remain in the home temporarily. Although it has not been reported whether the foreclosure has been officially placed on hold, the foreclosure action will be automatically placed on hold as soon as the local courts have been given notice about the bankruptcy filing.The couple is listed as co-defendants on multiple judgments and is seeking to rebuild through the bankruptcy procedure. The couple currently faces several judgments that include: $1 million from a negligence lawsuit, a $1.38 million unpaid loan, $65,932 owed in state income taxes and $112,000 owed in property taxes. The Chapter 7 bankruptcy form is a frequently used by individuals. This type of bankruptcy will liquidate the couple's assets to pay their debt and stay on their credit report for 10 years, but will provide the couple with a fresh start.
Source: Sporting News, "Jeremy Mayfield's wife files for bankruptcy," Bob Pockrass, May 10, 2012
]]>One such example is the private jet industry, which one aviation analyst describes as a "badly damaged market segment." Earlier this week, corporate jet maker Hawker Beechcraft filed for bankruptcy protection, seeking approval for a plan that would write off an estimated $2.5 billion in debt and eliminate almost $125 million in interest expenses.
]]> If you are a small business owner struggling with debt, there are different bankruptcy protections available to you. The type of filing best suited to you depends on many factors, including the amount and type of debt you owe, the type of business you have, and your long-term plans.If you are a sole proprietor, you and your business are considered the same legal entity, so by filing a Chapter 7 bankruptcy, you might have the chance to discharge both your business and personal debt. In fact, there may also be exemptions open to you as a sole proprietor to help you keep your business assets. If you have creditors and want to discharge those debts, a Chapter 7 may be an option to discuss with your attorney.
Depending on your long-term plans, you may also want to consider the options of Chapter 11 and Chapter 13 filings. Both offer restructuring options, although only sole proprietorships can file for Chapter 13. One thing is certain: you want an attorney on your side that can navigate the complexity of the bankruptcy code and help you obtain the best protections available.
Source: Florida Today, "Debt, down market drove plane maker to bankruptcy," Joshua Freed and Roxana Hegeman, May 10, 2012
]]>More and more recent graduates are seeking bankruptcy protection in part because student loan debt is weighing them down. In Omaha and every other city across the nation, the rule is that student loan debt is generally not dischargeable during bankruptcy unless extreme circumstances exist. Even though in most instances the debt is not dischargeable, it does not mean that a bankruptcy attorney can't help.
]]> When it comes to student loan debt, it is important to note that there are different kinds of debt. This could matter in terms of an individual's personal debt situation. Student loan debt can either be commercial or federal. Commercial loans are based on an individual's credit while federal loans are applied for through the Free Application for Federal Student Aid or FAFSA.New legislation is aimed at returning commercial loan debt to a more widely dischargeable status during bankruptcy proceedings. Currently, no definitive decision has been made on whether these acts will be enacted into law.
If you are feeling financial stress because of mounting student loan debt, it is important that you seek help early. A bankruptcy attorney can help determine what options for debt relief you may have and what course will prove most effective.
Source: cbs, "Student debt tops $1 trillion," May 1, 2012
]]>Nadya Suleman -- also known as the Octomom for having octuplets and a total of 14 children -- has recently filed bankruptcy. In addition to filing for bankruptcy, she is also facing potential eviction from her residence. Although she stated she has a plan in effect if she is evicted, she claims her financial situation is overwhelming.
]]> If she was evicted she claimed she would move into her friend's house. Even though she can rely on someone in the event of a potential eviction, financially relying on someone is much more difficult. This is the reason she has filed for bankruptcy. She claims her current financial and debt situation has hit rock bottom.Given her financial situation, she has decided to file Chapter 7 bankruptcy. Chapter 7 bankruptcy is a type of debt relief that immediately cancels all eligible debt after the bankruptcy has been approved. Her bankruptcy documents show her potential debt is approximately $1 million. This amount of debt is compared to a claimed $50,000 in assets and a claim that she is $30,000 behind in her rental payments. She is hoping the Chapter 7 bankruptcy is in the best interest of her family and will provide her and her 14 children a new start.
Source: The LA Times, "Octomom Nadya Suleman: 14 kids 'won't be homeless,'" May 2, 2012
]]>For homeowners who are struggling to pay their mortgage whether the home is underwater or not, this may seem like fantastic news. However, as mentioned in our prior post, there are some very real risks to consider before using the process as an alternative to facing foreclosure on the property.
]]> Even if you have submitted a bid for a short sale to your lender, the lender does not have to agree and can still file a foreclosure action. During the short sale process, a homeowner is still liable for their mortgage payments. There is never a guarantee that the short sale will solve the financial problems.Beyond the lender's ability to deny the sale is their ability to deny forgiveness of the remaining debt. The homeowner in that instance remains liable for the amount of debt that is not recouped through the sale. Even when a lender agrees to forgive the remaining debt, there are tax consequences. The debt forgiven is considered taxable income to the homeowner and the amount of tax is often one that they may not be able to afford.
Before making any serious decision such as a short sale, it is important to discuss your individual case with an attorney experienced in mortgage, foreclosure and bankruptcy matters. They will be able to advise you not only of your options and the possible consequences that will follow any decision you make, but they can ensure that your rights and interests are protected along the way.
Source: Reality Biz News, "Record Number of Short Sales Expected," Mike Wheatley, April 23, 2012
]]>A number of real estate experts are predicting that a new record will be set by the end of the year. A real estate data tracking company, RealtyTrac recently reported that in the twelve months preceding January 1, 2012, the number of short sales increased by approximately 33 percent.
]]> Not only have the number of short sales increased, but they now out-number foreclosure sales according to data from Lender Processing Services Inc. Their data showed that 23.9 percent of real estate transactions in January were short sales while only 19.7 percent were foreclosed properties.Part of the problem with short sales has been the length of time involved in accepting an offer, getting lender approval and closing the sale. The Federal Housing Finance Agency regulates Fannie Mae and Freddie Mac and has introduced new guidelines that they believe will help decrease the amount of time spent during the short sale process.
While this may seem like fantastic news to homeowners who have fallen behind on their mortgage, there are some risks involved in using it as a foreclosure alternative. We will cover some of these risks in the second post of this two-part series.
Source: Reality Biz News, "Record Number of Short Sales Expected," Mike Wheatley, April 23, 2012
]]>Several companies have had to scale back their operations at certain processing plants after the demand for the "pink slime" additive significantly increased. Large companies like Cargill have found creative ways to scale back output without having to close plants located in Nebraska and across the nation. Some -- like AFA Food -- have sought bankruptcy as a way out of the financial strain caused by the reduced production.
]]> Tyson is company who provides raw materials to AFA Food but says that they are "used to adapting to changing market conditions" and will be able to change the way they operate in order to stay afloat.Many businesses do everything right when it comes to daily operations. They can effectively use resources, pay their creditors on time, and properly set prices and manage output, but there are market factors that may be out of their control. When this occurs, smaller companies often feel the financial stress first and could benefit from either a bankruptcy plan to liquidate or restructure debt and continue operations until they can pull through a temporary setback.
Source: The Kansas City Star, "Pink slime fallout: Beef processor seeks bankruptcy," April 2, 2012
]]>One Nebraska couple is being accused of being less than honest with their bankruptcy case. Even if they are eventually found to be innocent, the lack of clarity regarding their bankruptcy filing is costing them dearly.
]]> The husband and wife, who live in Buffalo County, are accused of hiding $159,000 of the wife's income during their 2003 bankruptcy filing. What makes people suspicion is that the money came from work the wife did for Buffalo County, but did not ask to be paid for until after the bankruptcy was complete. Her husband, who was chairman of the Buffalo County Board at that time, actually voted in favor of paying the invoice, so he certainly knew about it.The husband and wife have claimed their innocence, but the U.S. Attorney for Nebraska believes otherwise and has accused them of bankruptcy fraud.
It is too early to tell how this will all work out, but regardless of the outcome, it should be painfully obvious to all Nebraska readers that honesty, transparency and clarity are essential if you are filing for bankruptcy. Being anything less than completely upfront is unfair, possibly illegal and very likely to cause a headache for you down the line.
Source: The Omaha World-Herald, "Buffalo County board chairman, wife indicted," April 18, 2012
]]>Hostess filed for bankruptcy in January, the second time it has done so since 2004. This time around, one of the company's chief objectives during its financial restructuring was to reduce the amount of money it has to funnel towards employees' pension and retirement benefits.
]]> However, the union that represents about three-quarters of Hostess Brand workers does not like that idea and has threatened to strike if management keeps pursuing the idea of slashing these "legacy costs."Hostess recently issued a sternly worded letter to its workers saying that if there is a strike, the work stoppage will mean the company will not have enough cash to continue operating and will shut down. Its point is that its workers can either accept a reduction in pension and retirement benefits or they can lose their jobs outright.
Now, most small businesses in Omaha that file for bankruptcy will not encounter problems anywhere near this size or scope, but we are telling you about this because it is important to understand that bankruptcy is serious business. You should not fear it or dread it, but you should approach it strategically. Oftentimes, the advice of an attorney who handles bankruptcies with regularity can be very helpful.
Source: CNN Money, "Strike threat at Hostess could kill off Twinkies," Chris Isidore, April 17, 2012
]]>Pinnacle Airlines, which is based in Memphis, recently said that its current business model is "not sustainable" and that bankruptcy was clearly its best option. Although it continues to have an agreement in place with Delta, it is coming to the end of agreements with United/Continental and US Airways.
]]> Pinnacle has $1.42 billion in debts and $1.52 billion in assets, which is not terrible, but it lost $8.8 million in the first nine months of this fiscal year. In the same time period last year, it earned almost $17 million. The airline has said that changing customer patterns (i.e. less-than-full flights) were largely to blame for the difference.Pinnacle executives have also said the company must cut costs and it will look to its 7,800 employees for help with that. Pinnacle is not the only regional airline to file for bankruptcy protection; American Eagle filed in November. Even larger airlines have struggled with these "legacy costs," or the expensive of providing former employees with health and pension benefits.
We do not know the financial details of Pinnacle's books, but unless there is something extraordinary, it seems like this is another case of a business making a go of it, having some success for awhile and then coming to an end. Naturally, no business owner wants his or her enterprise to come to a conclusion, but sometimes, it just makes the most sense.
Source: The Lincoln Journal-Star, "Pinnacle Airlines, Lincoln's Delta regional, files for Chapter 11 bankruptcy," April 2, 2012
]]>But even though Kinkade was enormously popular, he was not immune to the financial turmoil of The Great Recession. The company he founded, Morgan Hill, had to file for Chapter 11 bankruptcy in 2010 in large part because even if people still loved his work, they could no longer afford to buy it because their budgets wouldn't stretch that far.
]]> Make no mistake -- Kinkade was no starving artist (at least not lately). It is estimated that there are 10 million homes across the country that proudly display his artwork and a network of galleries all over America have devoted themselves to exclusively selling his artwork. But even that popularity was no match for how bad things got, economically speaking.Kinkade's story should show Omaha business owners that even if you have a popular product or service and even if you have a period of great success, the economy is fickle and unkind and can turn on a dime, leaving you scrambling for business and dodging calls from your creditors. Seeking bankruptcy does not mean that you are a failure or that you did not do a good job running your company. What it means is that hard times hit everyone and they hit some people harder than others.
Source: The San Jose Mercury News, "Details of artist Thomas Kinkade's tumultuous final years surface," Mike Swift, April 8, 2012
]]>The Gingrich Group, which Gingrich founded to promote his ideas for national healthcare policy, must have waited quite a long time to file for bankruptcy. In its Chapter 7 bankruptcy filing, it claimed it has liabilities up to $10 million and only $100,000 in assets
]]> If The Gingrich Group did hold on to the bitter end and only chose to file when there was no other option, that is, in a way, understandable. Bankruptcy is a big step and it is natural that filers want to exhaust all their options before they make that move.However, that approach sometimes results in would-be filers painting themselves into a corner. If an Omaha business owner meets with a bankruptcy attorney earlier in the game, for example, he or she may come to have a better understanding of his or her options and might be able to identify a good approach for the future. Bankruptcy is nothing to be scared of, but it is always better to have a good sense of one's options and to have the freedom to decide what is right for you when you feel the time is right, not when cirucmstances demand a decision.
Source: The Gazette Times, "Gingrich's think tank files for bankruptcy," April 5, 2012
]]>Getting out of this mess is going to take a lot of work, of course. And unfortunately, we're already behind in terms of setting things right, according to Treasury Secretary Timothy Geithner.
]]> In a speech at the Chicago Economic Club, Geithner said the housing finance area is "the biggest source of unfinished business in the financial reform effort." He said the government has not done enough to figure out how it can extricate itself from the housing market without causing an economic upheaval; its agencies Fannie Mae and Freddie Mac buy mortgage and repackage them as investments.While Geithner did not go much more into detail, given that he is the country's top financial expert, we can probably take him at his word when he says we have a long, hard path ahead of us. What that means is that an Omaha homeowner who is currently teetering on the brink probably cannot count on an economic renaissance coming to his or her rescue in the future. Instead, a better option may be to speak with an attorney who specializes in helping financially distressed clients and seeing what your options are.
Source: Reuters, "Geithner says U.S. far behind on housing finance reform," April 4, 2012
]]>However, that might be changing.
]]> Recently, Sen. Dick Durbin (D-Illinois) said he thinks that private student loans should be dischargeable in bankruptcy. Federal loans are still not able to be wiped away, and he said it does not make sense that private loans are treated the same way as federal loans, since federal loans are a government program and private loans are a market commodity.Student loans are not dischargeable in bankruptcy in part because what they are used to pay for, i.e. an education, cannot be confiscated the same way a house or a car can. However, many critics have pointed out the existing model does not work because students are taking a gamble that their education will result in more income, which certainly is not always the case, and that once students start accepting loans, they are more or less stuck with those loans and have no wiggle room.
Now, nothing on this matter has changed yet, which is unfortunate. However, it is good to see that Congress is aware of the problem and is at least considering taking steps to address it. Hopefully, something fruitful and productive will the end result of this discussion and Omaha students will not have to worry so much about their insurmountable student loan debt.
Source: The Huffington Post, "Congress Considers Proposals to Let Private Student Loans Be Discharged In Bankruptcy," Tyler Kingkade, March 30, 2012
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