Posts Tagged 'Bankruptcy'

Jan 23, 2012 Posted by Grace Macarthur No Comments » Tags: Bankruptcy Bankruptcy Double

How the Bankruptcy Double Standard Hurts Consumers

A recent article from The New Yorker highlights a troubling disparity in the way we view bankruptcy and loan restructuring in general in this country. As was evidenced in the recent bankruptcy filing of American Airlines, bankruptcy for corporate entities is generally considered part of an overall savvy approach to managing debts and investments.

While American could have continued paying its debts (it filed bankruptcy with more than $4 billion in the bank), it opted to take the bankruptcy route, which will allow it to restructure its debts into ones that make more financial sense. After the company filed its Chapter 11 bankruptcy petition, most analysts praised its decision, citing the success other airlines have had with reorganization bankruptcies in recent years.

For consumers interested in filing personal bankruptcy, though, the attitude of the general public is vastly different.

Bankruptcy as a Moral Issue

The current turmoil in the housing market highlights exactly how differently the general public views personal bankruptcy:

  • The housing bubble falsely inflated housing prices.

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Jan 13, 2012 Posted by Brianna Tewksbury No Comments » Tags: Bankruptcy Choices Lead Financial Choices Financial Choices Lead

Can Your Financial Choices Lead to Divorce and Bankruptcy in Arizona


Joint Accounts for Married Couples:  Can Your Financial Choices Lead to Divorce and Bankruptcy?

Several surveys report that the majority of married couples put all of their money in joint accounts.  However, that number is less than it used to be, and there are several other options available to married couples.

Some couples choose to keep a joint account for joint expenses, and two separate accounts for spending or saving money.   Others choose to completely separate their accounts, so that every payment needs to be coordinated and divided among spouses.  Which selection is the best, and is there one more likely to cause financial disaster than the others?

Sharing expenses seems natural for married couples, and often the choice newlyweds make will depend on the specifics of their relationship, expenses, and earnings.  If you have no direct reason to choose a certain way to divide or combine assets, it is best to choose what makes you most comfortable, and does not hurt your relationship.

When One Spouse Has Considerable Debt

If one spouse has quite a bit of debt, and the other does not, it will probably be best to consider that debt as mutual debt, for the sake of your relationship.  Studies have shown that couples that fight over debt tend to end up divorced, and can also fall into bankruptcy.

This does not mean it is wise to consolidate or legally take on the previous debt of your spouse, however.  Doing so may have financial implications in a divorce.  And many attorneys recommend a prenuptial agreement among spouses with variegated finances.

Take Spending Habits Into Account

In addition to debt, spending habits can cause tension, which can lead to divorce and bankruptcy down the road.  It is important to come to an agreement about your debt and your budget early in marriage, and preferably before the marriage.  That way, you will have made a mutual decision early on and prevent fighting and debt down the road.

Speak with a local bankruptcy attorney to discuss if bankruptcy is the best option for you.

Stephen M. Trezza

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Oct 20, 2011 Posted by Grace Macarthur No Comments » Tags: Bankruptcy Chapter Bankruptcy

What happens if a debtor fails the Chapter 7 Bankruptcy means test?

If you are considering declaring bankruptcy or have reached the point where you are going to declare bankruptcy, you may be wondering what type of bankruptcy is appropriate for you.  There are two main types of bankruptcies for individuals: Chapter 7 and Chapter 13.  The type of bankruptcy you can declare is based on a calculation called the means test.

Chapter 7 is a bankruptcy where your unsecured debts are liquidated or eliminated.  This means that you do not have to pay the debt ever.  Unsecured debts commonly include credit card charges, membership dues, and utility bills.  Chapter 13 bankruptcy is a reorganization of your debts.  This bankruptcy means your debts are reorganized so you have three to five years to pay them.

For the average person considering bankruptcy who has little property and a significant portion of their debt is unsecured debt, Chapter 7 is the preferable bankruptcy option.  This is because it means they do not have to pay the unsecured debt ever, whereas Chapter 13 will require them to pay the debt, only it is paid over a period of time.

For many years, because of the advantage a Chapter 7 bankruptcy provides in eliminating debt over Chapter 13 bankruptcy, individuals with high incomes who technically had the means to pay their debt through a Chapter 13 bankruptcy were still choosing Chapter 7 bankruptcy.  Therefore, in 2005, Chapter 7 bankruptcy was changed to include a “means test.”  The means test was created specifically to prevent individuals with high income from choosing Chapter 7 bankruptcy.

1. Are you earn

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Oct 16, 2011 Posted by Brianna Tewksbury No Comments » Tags: Bankruptcy Pennsylvania Chapter

Controversy erupts over Harrisburg, Pennsylvania Chapter 9 Bankruptcy Filing

Although the politics has been going on for a while, and rescue bills were considered, Harrisburg, Pennsylvania went ahead and filed Chapter 9 Bankruptcy.  The State of Pennsylvania has not only objected to the eligibility of the City of Harrisburg, the legislature is working on a bill that would strip the city of its ability to be a debtor in bankruptcy at all.

Documents can be read here:

Docket Report for City of Harrisburg, Pennsylvania Chapter 9 Bankruptcy

 Chapter 9 Bankruptcy Petition for Harrisburg, Pennsylvania

Objection by State of Pennsylvania to Harrisburg bankruptcy filing 

Oct 13, 2011 Posted by Grace Macarthur No Comments » Tags: American Airlines Bankruptcy

American Airlines & The Long-Term Financial Benefits of Bankruptcy

The current financial situation of American Airlines serves as a lesson on how filing for bankruptcy can lead to long-term financial strength – and, perhaps more importantly for the airline, how avoiding bankruptcy can sometimes cause long-term financial struggles.

Of course, every individual situation is unique and the American Airlines model can’t be applied across the board. But for people teetering at the edge of their finances wondering whether personal bankruptcy could have any benefits down the road, the story of American Airlines is worth considering.

In the months and years immediately after the terrorist attacks of September 11, 2001, Americans flew less and many airlines struggled to remain profitable. In the ensuing years, many of them (including Delta, Northwest, US Airways and others) filed for Chapter 11 bankruptcy protection, which allowed them to reorganize their finances and debts.

American Airlines did not choose bankruptcy; instead, the airline opted to negotiate benefits and salaries with its employees and managed to continue operating. At

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Sep 21, 2011 Posted by Grace Macarthur No Comments » Tags: Bankruptcy

Can You Change Your Mind Once You Have Filed a Bankruptcy?

The deadlines in bankruptcy can be extremely important and the failure to observe them or act timely on them can jeopardize your rights, claims, and interest in the case. Nevertheless, you do have the right to change your mind about bankruptcy, but to do so can be a lengthy and sometimes complicated process.

Since there are basically only two bankruptcies most individuals file, a Chapter 7 or a Chapter 13, you must meet certain standards established by law in order to change your mind about filing in either case. Bankruptcy courts take very serious their obligation under bankruptcy laws to provide a certain level of protection to both creditor and debtor while allowing the honest person to work their way out of a bad financial situation, or in some cases, to completely start fresh.

Each type of bankruptcy has its quirks when it comes to a filer changing their mind about filing. If you change your mind about your need for a bankruptcy discharge, you may seek to have your case dismissed. Typically, you must file a motion with the court giving “sufficient reason” for your desire to withdraw from the bankruptcy. Suf

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Aug 25, 2011 Posted by Grace Macarthur No Comments » Tags: 13 Bankruptcy Bankruptcy Chapter 13 Chapter 13 Bankruptcy

Why Escrow Accounts Matter in Chapter 13 Bankruptcy

Recent court rulings may have significant impact on how bankruptcy courts handle escrow debts in some Chapter 13 bankruptcy cases. Here’s an overview of the issue and how escrow debts are likely to be handled in future bankruptcy cases.

Escrow accounts are accounts set aside as part of a mortgage deal to hold money for expenses like property taxes and homeowner’s insurance. In many cases, the mortgage lender or servicer collects escrow money as part of monthly mortgage payments.

When a homeowner falls behind on mortgage payments, she likely also falls behind on escrow payments. This can lead to difficulties paying property taxes and other non-mortgage fees associated with homeownership.

This may become problematic if a person files for Chapter 13 bankruptcy to avert foreclosure, which is fairly common because of the foreclosure-halting powers of the automatic stay. In Chapter 13 bankruptcy cases, the following might happen to escrow accounts:

  • Mortgage debts can’t be modified in bankruptcy court. This provision was established decades ago as part of efforts to encourage homeownership among Americans. But f

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Feb 14, 2011 Posted by Grace Macarthur No Comments » Tags: Bankruptcy Church If File Bankruptcy

Can I continue to give tithes and offerings to my church if I file bankruptcy?

Recently I was counseling a married couple regarding bankruptcy and they asked me if  they would still be able to continue giving to their church if they file bankruptcy.

The simple answer is yes.

For people of faith in America, the giving of tithes and offerings represents a significant part of the free exercise of religion, which is guaranteed to all Americans under the First Amendment. Current bankruptcy law protects both debtors’ rights to donate and religious charities’ rights to keep donated money.

Debtors taking the Means Test to determine whether or not they qualify to file Chapter 7 bankruptcy can allocate as much of their income to charity as desired as long as the charitable giving is in line with past practices and not merely a strategy to pass the means test. Similarly, Chapter 13 debtors can use charitable contributions to reduce their disposable monthly income which will in turn reduce their monthly Chapter 13 plan payment.

However, not long ago, the situation was very different. Tith

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