Riverside County Restaurants Expanding Marketing Strategies.
The downturned economy is setting the perfect scene for a battle starring restaurants, food chains and small diners in Riverside County
Restaurants and other food joints are using different tactics to attract customers, keep the loyal ones, if it comes to it, to avoid layoffs and closings
Facing soaring ingredient prices and lack of customers, the food industry has been doing all it can to survive this recession. Employing tactics such as value deals, 2 x 1 coupons, smaller food portions, price increases and lunch service elimination, restaurants of all sizes in Riverside County and San Bernardino County are hoping this will be enough to avoid bankruptcy.
Some of the chains and restaurants that have implemented these tactics are Black Angus and The Daily Grill, which have eateries in Riverside, and Mimi’s Café in Temecula, Chino, Corona, and Fontana
None of these chains or restaurants have been forced into bankruptcy — yet. Riverside County and other Inland Empire residents are hoping it stays that way…
Cash Decreases, Creativity Increases.
In an economy such as ours, where many Riverside County residents and businesses are doing all they can to avoid bankruptcy, and in many cases need the help of bankruptcy attorneys, creative solutions to save cash are needed. For even if a bankruptcy attorney is to be hired, there still has to be some cash around to pay for those bankruptcy services. Enter: bartering.
The practice of bartering has increased these past few months, according to Mike Ames, founder of Trade American Card, a barter club based in Orange County. Barter, or reciprocal trade, allows people to trade goods or services for other people’s products or services. “If you need to save cash, bartering is best”, says Bob Meyer, founder and publisher of the Mission Viejo trade publication “Barter News”.
Trade American Card hosted its 38th Barter Expo this past Sunday in Anaheim. They were expecting more than 1,000 people and 150 exhibitors selling the products they usually barter. “The potential deals are almost limitless”, said Paul Herrera, owner of Herrera Advertising and Marketing in Garden Grove.
Nevertheless, Mayer notes that trade exchanges are not exempt of risks. “See where you can spend your trade dollars”. “[When doing barter,] the chance you take is that the small business will still be in business later”.
For many professionals and stores located in the Riverside County cities of Corona, Temecula, Murrieta, as well as in other Inland Empire cities like Ontario, Rancho Cucamonga, and Fontana, bartering could be a good option to get the most out of their bucks, possibly avoid bankruptcy, or at least save some cash to be able to pay for a bankruptcy attorney.
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Abrupt Closing of Car Dealership in San Bernardino
This week, Inland Valley Buick Pontiac GMC in San Bernardino unexpectedly closed its doors after being in business since the 1970’s. This abrupt cease of operations took place Monday morning, and made Inland Valley the sixth Inland dealership that closed its doors this year.
Jessica Caldwell, an analyst at auto research firm Edmunds in Santa Monica, stated that dealerships are not being able to get lines of credit to buy more vehicles for their lots, and at the same time, buyers are not coming to their lots. “The dealerships are getting hit from both sides”, Caldwell said. According to her, regions that experienced fast growth in recent years, such as the Inland area, are now more susceptible to these kind of consumer spending pullbacks. With people losing their jobs and income, it’s understandable that purchases of durable items, such as cars, are being put off until further notice.
The Inland Valley Buick Pontiac GMC had 50 employees, which means 50 more people will be facing layoffs and possible bankruptcy filings in the near future. Other closed dealerships in the Inland Empire include ones in Colton, Loma Linda and San Bernardino.
For loyal customers that live nearby, whether coming from Fontana, Riverside, Rancho Cucamonga, Rialto, Moreno Valley, or even Corona, the economy has forced them to shop elsewhere for that new or used car — that is, assuming they can even afford one these days.
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During Credit Crunch, Bankruptcy Difficult to Avoid
Last month saw a 34% growth in bankruptcies filings, as compared to cases filed in October 2007. According to the New York Times, this increase in the number of bankruptcy filings is due in large part to the specific nature of this particular economic crisis.
Besides the usual reasons why people look for bankruptcy protection, such as job loss, medical bills, divorce, the central reasons for the increase in Chapter 7 and Chapter 13 bankruptcy filings during this economic crisis have more to do with the abrupt drop of home values, unstable incomes, and the “credit crunch”.
It seems that more people are turning to bankruptcy lawyers during this economic downturn than during the tech bust because of how the mortgage crisis has affected the lending practices of financial institutions. Essentially, where debtors used to be able to avoid bankruptcy by obtaining more credit, and tried to stay afloat for a while longer, the current “credit crunch” has made it nearly impossible for many to obtain new credit cards, refinance their home mortgages, or get a home equitiy line of credit, due to the banks’ pull back on lending. This has, in turn, driven many debtors to file for bankruptcy that would have otherwise avoided it. This does not mean that many people aren’t trying their best to avoid filing, as seen in a key statistical comparison to the filings in 2001.
In recent studies, it was shown that the typical family who filed for bankruptcy in 2007 carried 21% more secured debt and 44% more unsecured debt than people who filed in 2001, even though average income among those filing for bankruptcy remained static over those six years. So although income stayed the same, debt rose, illustrating the attempt by debtors to put off bankruptcy as long as possible while trying to get back on their feet. Studies also show that filings increased mostly in places where real estate values skyrocketed and then crashed, including Corona, Murrieta and Temecula in Riverside County.
Although filing for bankruptcy and hiring an attorney is not anyone’s idea of a good time, for many Riverside and San Bernardino County residents it’s the most sensible solution to get their financial sanity back, and the best path toward a well deserved fresh start.
Fifteen SunCal-Lehman Brothers Developments in Bankruptcy
The number of Sun-Cal Cos. Developments that have faced bankruptcy petitions increased by three this week, bringing to 15 the total of Irvine-based, SunCal-Lehman Brother projects in California that are under U.S. Bankruptcy Court supervision.
The total of SunCal voluntary and involuntary petitions submitted by attorneys reached 15 after the filing of the Northlake development in Castaic and its Oak Valley and Heartland projects in Beaumont, along with a petition against the SunCal Marblehead development in San Clemente.
The involuntary petitions take place when one of the parties, in this case Lehman Brothers, who financially backed up the projects, does not consent to a voluntary bankruptcy filing. Thus, involuntary bankruptcy is the only way SunCal can get their projects into bankruptcy court, in order to get additional financing.
Officials of SunCal also disclosed that involuntary bankruptcy petitions are to be expected within days on the other five developments controlled by Lehman. David Soyka, SunCal company spokesman, said that Lehman has cut off critical funding for their developments since the investment bank had its lawyers submit their petition for bankruptcy in September.
Soyka said that SunCal has lined up a partner willing to provide $75 million. But SunCal’s proposed bankruptcy lender is requiring priority over Lehman’s liens before providing the financing.
Some of the SunCal Cos. Developments filed for bankruptcy are located in the cities of San Juan Capistrano and San Clemente in Orange County. Others are located in Riverside County, in the cities of Yucaipa, Modesto, Rubidoux and Beaumont.
Read a related article at the OC Register.
One Reason Why Debt Reduction Plans Aren’t As Good As They Sound
Like most people, when I drive to work every morning I surf the various local radio stations. I’ve noticed a lot more advertisers for debt reduction plans, sometimes called debt elimination or debt negotiation, lately. The fact that they advertise on the radio tells me that the current financial stress is impacting everyone – whether living in Murrieta, Temecula, Corona or Rancho Cucamonga.
But debt reduction plans are not always as helpful as they might sound. Why? Debt forgiveness doesn’t eliminate as much debt as you might think. The reason: Borrowers must often pay high fees and pay income tax on the forgiveness of debt.
You see, debt forgiveness is usually considered to be a taxable event, because a taxpayer is deemed to have gained something (income) by not having to pay back the debt. So, our U.S. and California tax laws impose a tax on forgiveness of debt “income.”
The taxes are often waived if the forgiveness of debt occurs while the borrower is insolvent or bankrupt (filing a bankruptcy is not required), so it doesn’t always impact every debtor, but here’s an example of how it might affect a typical borrower:
Net Benefit of Debt Reduction Plan
$100,000 Total Debt
$40,000 Reduced Debt (expected payoff)
$15,000 Debt Reduction Fees (attorney/debt consultant fees)
$16,200 Forgiveness of Indebtedness Tax (see below)
$71,200 Total Payments After Debt Reduction
$28,800 Net Benefit After Debt Reduction
Forgiveness of Indebtedness Tax Calculation
$45,000 Taxable Forgiveness of Indebtedness (forgiveness of debt less fees)
$12,600 Federal Tax for Forgiveness of Indebtedness (assumes 28% tax bracket)
$3,600 State Tax for Forgiveness of Indebtedness (assumes CA 8% tax bracket)
In this greatly simplified example, a borrower paying a 15% fee on a $100,000 debt reduction plan and who must pay typical income tax rates on the anticipated 60% forgiveness of indebtedness “income” would only benefit by approximately $28,800. Although it is a benefit, it’s far less than the “60%” reduction amount that most people expect when they hear a radio add promising a reduction of “up to 60%.”
Something to think about before deciding to sign up for a debt reduction plan…
Are Gift Cards Safe from Bankruptcy? Think Again.
Have you ever thought what to do with a “toxic” gift card? You know, those gift cards from companies that could go bankrupt?
Lots of people see gift cards as the perfect present, but what if those gift cards belong to the troubled retailers that faced closings in 2008? It’s estimated that more than $75 million from store and restaurant gift cards could be lost this year. Having so many retail stores and shopping malls here in Riverside County, this is something to be worried about. Inland Empire shopping Meccas like Victoria Gardens in Rancho Cucamonga and the Ontario Mills Mall are home to plenty such stores, and are hubs for much Christmas gift shopping.
Last Christmas, shoppers spent approximately $26.3 millions on gift cards at retailers. Big retailers, such as Sharper Image, Bombay Co. and most recently Circuit City, have filed for bankruptcy protection. The Bankruptcy Code considers unused gift cards as unsecured debt, which means that the company would not be forced to honor them, no matter if the amount goes to $20 million as in Sharper’s case.
Although Sharper Image first decided not to honor the gift cards, the company later proposed to accept them if the clients spent twice the value of the gift card on a single transaction. So, in order to get your Christmas present from Grandma, you would need to spend twice its value. Talking about not-so-good deals.
In cases in which a company is sold or reorganized, and continues its operations, most owners will get authority from the Bankruptcy Court to honor the cards, but in outright liquidations, in which stores are closed, the cards would be worthless. In that case, you could use your long expected gift card as a ruler, or as a chewing gum scratching tool.
What are you going to give your picky relatives this Holiday season? When in doubt, just remember that good old cash never expires, and it’s always well received.
Circuit City Files for Bankruptcy, Closes Riverside County Stores
Circuit City Stores Inc. filed for bankruptcy Monday, November 10th, 2008. The announcement was made approximately a week after the company said it would close 20% of its stores.
Circuit City said it decided to file for protection under the Chapter 11 of the Bankruptcy Code, because it will allow the company to hold off creditors and continue its operations, while a reorganization plan is designed. The company said it was facing pressure from vendors who threatened to withhold products during the holiday period, and that’s why it decided to file for Bankruptcy protection.
James A. Marcum, vice chairman and acting president and chief executive, said in a statement that filing for bankruptcy “should provide us with the opportunity to strengthen our balance sheet, create a more efficient expense structure and ultimately position the company to compete more effectively”.
In the Riverside County, stores will be closed in the cities of Riverside, Murrieta, Moreno Valley and Mira Loma. Stores located in Pomona, Compton, City of Industry in Los Angeles County and Foothill Ranch in Orange County will also be closed. Other Southern California stores targeted for closure include locations in Escondido and Vista in San Diego County.
There will still be plenty of stores that will remain open in the Inland Empire, however, including locations in the cities of: Moreno Valley, Montclair, Rancho Cucamonga, San Bernardino, and Temecula.
You Don’t Always Have to Wait Eight Years to Get A Discharge in a Second Bankruptcy Case…
With the cost of living increasing in Riverside as much as it is – particularly the cost of renting or owning a home in popular locations like Redlands, Corona, and Temecula – it often means that people who have filed a bankruptcy case earlier in life must do so a second time.
The first bankruptcy case often comes about when someone in their 20s or 30s who rents in an average cost neighborhood such as Riverside, Ontario or Moreno Valley, runs into credit problems due to easy access to credit cards, car loans and loans for “toys.” A person filing bankruptcy in their twenties often elects to file a Chapter 7 “straight” bankruptcy case, because it’s best suited to their situation.
However, the same person might become unemployed a few years later - unable to pay their home loan payments on the home they purchased in a family community such as Rancho Cucamonga, Corona, Murrieta or Temecula. If this is the case, a bankruptcy plan may be needed to bring home loan or tax payments current – something that a Chapter 13 “payment plan” bankruptcy can help with.
The good news is that the Bankruptcy Code does not limit the number of times a person can file for bankruptcy. So, it is likely that a second bankruptcy case can be filed. The Bankruptcy Code does have limits, though – a minimum amount of time must pass before a debtor can file a second bankruptcy case and obtain a discharge of his or her debts.
More good news: The Bankruptcy Code allows people to file a bankruptcy case as soon as two years (yes, 2 years!) after the first case and obtain a discharge – depending upon the type of case previously filed and the type of case to be filed. So don’t be discouraged if you find yourself in need of a second bankruptcy – it happens more often than you might think. Talk to an attorney or lawyer about your situation. He or she may be able to help.
How to Pay Off Your Current Car Loan in Bankruptcy with a New Loan and Only Owe the Current Value of the Car…
Riverside, California is in the heart of the car capital of the United States – if not the entire world. Look down any street in Redlands, Canyon Lake or even Corona, for that matter, and you will see rows of beautiful new cars in parking lots and driveways all around you. Most of those car owners are making large payments on their cars, so here’s a tip for those who need to file a Chapter 7 bankruptcy case and also want to reduce their car loan balance and payments.
Many bankruptcy attorneys know that a debtor (borrower) may redeem a car when filing a Chapter 7 bankruptcy case. Redemption is a right granted under Bankruptcy Code Section 722 that gives the borrower the right to purchase an asset at its current fair market value when a Chapter 7 case is filed.
Most borrowers don’t have the available cash to buy their car out of the Chapter 7 bankruptcy estate, though. So, it would seem that Bankruptcy Code redemption doesn’t help most borrowers.
What most debtors – and even many bankruptcy attorneys – don’t know is that there are actually a few lenders that will give borrowers a new loan on their car – while in bankruptcy – to pay for a redemption of the car. So, many borrowers who otherwise wouldn’t be able to redeem their cars now can.
You might ask, “Why would a person want to take out a new loan to redeem their car”?
There are two really good reasons: The new car loan will be for the current fair market value of the car (almost always less than the balance of the existing car loan), and the payments will also be lower.
Often times redemption lenders are able to help a borrower “purchase” the car back for as little as one half the current loan balance and with one half the current car loan payments. If this seems like a good deal for you, you should ask your bankruptcy attorney about it…
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