Archives

2008

December

12/30/2008posted byDr. Grey

Holiday Sales Drop to Force Bankruptcies, Closings

From Bloomberg news online:

“U.S. retailers face a wave of store closings, bankruptcies and takeovers starting next month as holiday sales are shaping up to be the worst in 40 years.

Retailers may close 73,000 stores in the first half of 2009, according to the International Council of Shopping Centers. Talbots Inc. and Sears Holding Corp. are among chains shuttering underperforming locations.

More than a dozen retailers, including Circuit City Stores Inc., Linens ‘n Things Inc., Sharper Image Corp. and Steve & Barry’s LLC, have sought bankruptcy protection this year as the credit squeeze and recession drained sales. Investors will start seeing a wide variety of chains seeking bankruptcy protection in February when they file financial reports, said Burt Flickinger.”

As previously posted on this blog, Riverside County has been affected by the filing of bankruptcies and closings of stores like Circuit City and Linens ‘n Things. From Corona to Temecula to Rancho Cucamonga, store closings have left little of Riverside County untouched. So far only bankruptcy lawyers seem to have benefited. But Flickinger says that retail bankruptcies may be good for the industry in the long run:

“We’ll be going from a Dickens-esque worst of times this December to the best of times in future Decembers because we’ll rationalize out all the redundant retailers and retail space in shopping centers,” Flickinger said.

We shall see…

For More Information: click here

12/29/2008posted byAlex

California Cities Included In Bankruptcy Prediction For 2009

Four cities in California and six other cities nationwide will be seeking for bankruptcy lawyers soon, according to a prediction by John Moorlach.

Moorlach, the accountant who predicted Orange County’s bankruptcy in 1994, said as many as 10 cities will look for court protection from creditors next year under Chapter 9 of the bankruptcy code, as public finances get worse.

Although he estimated these numbers based on general economic conditions, Moorlach, now chairman of the Orange County Board of Supervisors, didn’t mention the California cities that may file for bankruptcy. Will Corona be one of those municipalities? Is Temecula next?  Let’s hope that this coming year, Riverside County cities escape the pain of bankruptcy, so that we can all have a happy new year!

12/22/2008posted byDr. Grey

Polaroid Files for Bankruptcy — Again

Riverside County residents learned earlier this year of Circuit City’s bankruptcy and store closings; now it appears that the stores that remain open may have one less brand of merchandise to sell — Polaroid. Back in February, Polaroid stopped producing it’s signature instant film cameras, and switched gears to focus on LCD TV’s, digital cameras, and other such electronics products. Now, the bankruptcy attorneys for Polaroid have begun the Chapter 11 bankruptcy process because Polaroid’s parent company, Petters Group Worldwide, is embroiled in a fraud investigation. Polaroid said that the bankruptcy reorganization will not impact day-to-day operations, and that Polaroid will likely be sold at the end of the process.

So fear not, Riverside County and San Bernardino County residents.  It seems that, for the time being at least, you can still shop for Polaroid products this holiday season, whether at the Ontario Mills Mall, Victoria Gardens in Rancho Cucamonga, the Crossings in Corona, the Tyler Mall in RIverside, or at any of the many other Inland Empire shopping centers.

Polaroid filed for Chapter 11 bankruptcy previously in 2001.

For More Information: click here

12/19/2008posted byDr. Grey

Chrysler to Close Factories in Riverside County

From instantriverside.com:

“In a cost-cutting move, Chrysler announced Wednesday that it is halting production of vehicles at all of its factories. It is unclear if this will have any impact on dealerships at the Riverside Auto Center.

Moss Bros. Dodge and Riverside Chrysler Jeep sell Chrysler products at the Riverside Auto Center.

Here is the official statement issued by Chrysler LLC:

Due to the continued lack of consumer credit for the American car buyer and the resulting dramatic impact it has had on overall industry sales in the United States, Chrysler LLC announced that it will make significant adjustments to the production schedules of its manufacturing operations. In doing so, the Company will keep production and dealer inventory aligned with U.S. market demand.

In response, the Company confirmed that all Chrysler manufacturing operations will be idled at the end of the shift Friday, Dec. 19, and impacted employees will not return to work any sooner than Monday, Jan. 19, 2009.”

For Riverside County and San Bernardino County residents, this is another sign that the economic crisis is hitting main street as hard as wall street.  Car companies like Chysler are surely being affected by the number of bankruptcy filings, as car loan debts are often high on the list of debt that is discharged when an individual files for Chapter 7 bankruptcy.  From Temecula to Riverside, from Chino to Rancho Cucamonga, Inland Empire residents and businesses are feeling the pain.   Whether it means discharging the debt in bankruptcy on a car loan that can’t be paid, or simply not being able to buy a new car, Christmas won’t be what it used to be for the customers or the employees of car dealerships this year.

12/17/2008posted byDr. Grey

Recession to Take Especially Big Toll On Riverside County

Although the economic crisis is hitting California as hard as the rest of the country, it is hitting certain counties in California even harder, according to UCLA economists. Riverside County, San Bernardino County, Orange County, and a few other areas will feel the effects of the recession more than the rest of the state.

“The Inland Empire, Orange County, the East Bay and the Central Valley will be hit the hardest as the recession provides a double whammy with a generalized downturn in demand and a postponement of a recovery in residential construction,” says the UCLA quarterly economic forecast.

According to the forecast, the next year will only get worse for Riverside County residents, as unemployment will continue to rise. This, in turn, will lead to less consumer spending and more consumer and business bankruptcies. Bankruptcy attorneys in both Riverside and San Bernardino counties, from Temecula to Rancho Cucamonga, are reporting high volumes of new bankruptcy clients seeking to file Chapter 7 and Chapter 13 bankruptcies. As far as business in California goes, bankruptcy attorneys are among the select few that are seeing an increase in clients from this crisis.

For More Information: click here

12/10/2008posted byAlex

Treasury Department Rejects Proposed Changes Favoring Credit Card Forgiveness.

Banks and consumer advocates recently requested changes that would permit forgiveness of as much as 40% of debt for borrowers who do not qualify for existing programs. The proposed changes would also have permitted borrowers to defer taxes on forgiveness of indebtedness until after the end of any repayment plan. Current law requires borrowers to recognize and pay taxes on the forgiveness of debt immediately.  The plan would have benefited lenders by allowing them to recognize losses associated with charge offs of unpaid debt at the end – rather than the beginning – of repayment plans.

The change would have also helped borrowers – particularly those in Orange County and Riverside County where qualification for Chapter 7 may be difficult – who are attempting to avoid bankruptcy by negotiating credit card payoffs.

The Financial Services Roundtable and the Consumer Federation of America, who made the request, hoped such a pilot program would become permanent and that as many as 50,000 people struggling with credit card debt would be involved.

It is unfortunate that the Treasury Department rejected this proposal, as this would have helped residents from Riverside County get back on their feet, and avoid possibly needing a bankruptcy attorney.  Until these and other measures are adopted, however, more and more Chapter 7 bankruptcies will be filed in Riverside County and San Bernardino County, from Corona to Murrieta to Rancho Cucamonga.

12/04/2008posted byAlex

Unemployment In Inland Empire At Highest Peak In 13 Years.

As the Inland Empire has been one of the hardest hit by the economic recession, it’s not surprising that it is expected to experience an extremely high rate of unemployment — the highest rate in the area in 13 years, and the highest of any large metropolitan area in the country.

The unemployment rate in the Riverside, San Bernardino and Ontario areas reached 9.5% in October, 3% greater than the national rate, and 1.3% greater than the state rate of 8.2%.  Other hard hit cities in Riverside County and San Bernardino County include Corona, which has seen a large number of foreclosures, as well as Temecula and Murrieta, which have had a high number of bankruptcy filings recently.  Indeed, bankruptcy attorneys all over the Inland Empire are noticing increased bankruptcy filings, many of which involve recently unemployed clients.

The reason of these shocking numbers is mainly the local housing market collapse.  Its effects immediately impacted the construction and lending industries, and eventually the effects crept to almost every industry, including retail, manufacturing and local government.

Unemployment has driven people to search for bankruptcy lawyers in order to solve their financial problems before it’s too late, or to find other alternatives such as debt negotiation, or a modification on their loan terms.

Read a related LA Times article here

2009

12/03/2009posted byDr. Grey

General Growth restructures $9.7 billion in debt

General Growth, a Chicago based company, owns Tyler Galleria Mall of Riverside, Redlands Mall and the Moreno Valley Mall. General Growth has submitted their plan for Chapter 11 in hopes that 92 of their properties will not see a bankruptcy by the end of this year. A segment of the Associated Press article posted on SFGate is below:

“General Growth Properties Inc. said Wednesday lenders have agreed to restructure about $9.7 billion in debt under a plan that will allow 92 of its properties to emerge from bankruptcy protection by the end of the year. The nation’s second-largest mall operator will pay off loans that cover regional shopping centers, offices, community centers and related subsidiaries. The plan will allow the real estate investment trust to retain ownership of the properties, including the Ala Moana Center in Honolulu and the Harborplace & The Gallery in Baltimore.

• Mugabe defends business take overs 02.20.10

The Chicago-based company expanded aggressively during the real estate boom, amassing $27 billion in debt. As the real estate market imploded and financing dried up, General Growth was unable to refinance its short-term loans and in April became the largest U.S. real estate company to file for bankruptcy.”

Read the full article posted on SFGate here.

2008

12/03/2008posted byAlex

Biotechnology Companies Affected By Finance Crisis

Biotechnology companies have been hit hard by the global economic crisis, as seen by recent and unprecedented bankruptcy filings, as well as in the cut in funds allocated to the development of new drugs to treat diseases such as multiple sclerosis, Alzheimer’s and Parkinson’s.

Last month, at least five biotechnology companies have had their attorneys file bankruptcy for them, something unusual for the industry. Biotechnology bankruptcies have been relatively rare, as struggling companies have opted for other solutions, such as new investors, mergers, or new licensing or development deals.

Tactics used by some biotechnology companies to avoid bankruptcy include downsizing, moving to smaller offices, shelving early research projects and delaying research on new drugs, all in order to avoid looking for a bankruptcy attorney.

Investors are expected to come back once the economy gets stable, so the biotechs continue working on projects like a prostate cancer therapy, a polio vaccine and new diabetes treatments.

For more information, click here

November

11/26/2008posted byAlex

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…

Click here to find out more.

11/25/2008posted byAlex

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 38^th 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.

For More Information, Click Here

11/18/2008posted byDr. Grey

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.

For more information, click here.

11/17/2008posted byDr. Grey

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.

To read the NY Times article,

11/14/2008posted byDr. Grey

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…

11/14/2008posted byAlex

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.

11/11/2008posted byAlex

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.

11/10/2008posted byDr. Grey

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.

11/10/2008posted byAlex

Circuit City Files for Bankruptcy, Closes Riverside County Stores

Circuit City Stores Inc. filed for bankruptcy Monday, November 10^th, 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.

2009

11/09/2009posted byDr. Grey

Chapter 7 Bankruptcy Filings for Inland Empire, October 2009

From the Curtis Law Group Blog:

“Chapter 7 bankruptcies filed by residents of Riverside County and San Bernardino County are filed in the Riverside Bankruptcy Courthouse.  Data from that court points to the following ten cities as having the highest number of Chapter 7 bankruptcies for residents of those counties for October 2009:

Corona, Fontana, Hemet, Hesperia, Moreno Valley, Murrieta, Ontario, Rancho Cucamonga, Riverside, and San Bernardino.”

2008

11/05/2008posted byDr. Grey

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…

11/04/2008posted byDr. Grey

Bankruptcies Surpass the 100,000 Mark for October

This October, for the first time since the Bankruptcy Code was changed in 2005, more than 100,000 people filed for bankruptcy in a single month. Accounting for both businesses and individuals alike, the month of October yielded 108, 595 bankruptcy filings in the U.S. This number is an increase of 13% from the month of September.

Although the revision to the Bankruptcy Code in 2005 led to a reduced average number of bankruptcies during the past three years, the financial problems created by this year’s mortgage crisis and credit crunch have made filing for bankruptcy a necessity for many businesses and individuals who might have tried to avoid it at all costs in the past.

For more information: “Bloomberg Article”

October

10/31/2008posted byDr. Grey

Inland Empire Foreclosure Rate Among Highest in Nation

In Riverside County and San Bernardino County, approximately one in every 32 households has received a foreclosure notice. Except for Las Vegas and Stockton, these are the highest foreclosure rates in the country.

The good news for Inland Empire residents is that, even though this statistic might suggest otherwise, foreclosure rates have declined sharply in Riverside and San Bernardino counties from August to September. This decline is almost entirely due to the new California state law requiring mortgage servicers and lenders to give homeowners 30 days to attempt to fix their troubled loans.

10/31/2008posted byDr. Grey

Chapter 7 Bankruptcy Filings in Riverside Courthourse

During the month of October, there were more than 1400 Chapter 7 bankruptcy filings in the Riverside Courthouse. The 10 cities or towns accounting for the most filings for that month were: Corona, Fontana, Hemet, Moreno Valley, Murrieta, Ontario, Rancho Cucamonga, Riverside, Temecula, and Victorville. Unfortunately, these results are identical to the month of September, suggesting that the trend of high filings within those afflicted areas is not changing for the better. Other Inland Empire cities worth mentioning that also produced a significant number of filings include: Hesperia, Indio, Lake Elsinore, Menifee, Perris, and Rialto.

Astoundingly, these 1400 + bankruptcy filings came from people across 87 different cities and towns within the area, illustrating that no area is immune from the effects of a troubled economy.

2009

10/03/2009posted byDr. Grey

Chapter 7 Bankruptcy Filings, September 2009

Chapter 7 bankruptcy filings in the Riverside County Bankruptcy Courthouse for September, according to research done by a leading bankruptcy law firm,  continue to trend upward in 2009.

The cities with the most Chapter 7 bankruptcies in Riverside County and San Bernardino County for September did not change from the top-ten in August:

Corona, Fontana, Moreno Valley, Murrieta, Ontario, Rancho Cucamonga, Riverside, San Bernardino, Temecula, and Victorville.

Bankruptcy attorneys in the Inland Empire are also noticing a high number of filings from bankruptcy debtors residing in Chino, Chino Hills, Hemet, Hesperia, and Lake Elsinore.

September

09/07/2009posted byDr. Grey

Chapter 7 Bankrutpcy Filings For August 2009

Chapter 7 bankruptcy filings in the Riverside County Bankruptcy Courthouse for August 2009 reveal that the top ten cities in Riverside and San Bernardino County with the most Chapter 7 bankruptcies were:

Corona, Fontana, Moreno Valley, Murrieta, Ontario, Rancho Cucamonga, Riverside, San Bernardino, Temecula, and Victorville.

Bankruptcy attorneys from Riverside and San Bernardino County are also witnessing a high number of filings from debtors residing in Chino, Chino Hills, Hemet, and Hesperia.

09/03/2009posted byDr. Grey

Bankruptcy For Riverside Golf Club Closes Down Establishment Beloved By Locals

Chapter 11 Bankruptcy has led a beloved local Golf Club in Riverside to close it’s doors.

From the Press-Enterprise, online:

“The Riverside Golf Club closed for good Wednesday, still owing the city more than $300,000 and holding thousands more belonging to a couple who had poured their life savings into a wedding they had planned there for Saturday.

The closure of the club, at least a half-century old, also sent other patrons scrambling to find alternate links to play and conference rooms to meet in.

Howsmith Corporation, which leases the property from Riverside Public Utilities, has been in arrears since November 2006 and owes $334,000, said City Councilman Mike Gardner, whose Ward 1 includes the club. “I’m surprised,” he said. “I had no idea this was coming.”

Howsmith filed for Chapter 11 bankruptcy Aug. 14, according to the bankruptcy document. A Web site lists Jacklyn Smith as the president of the Riverside company founded in 1979. No one answered at the phone number listed at the same address as the Riverside Golf Club.

Wednesday, John Lee Brown and Dimitra Kelly stood outside the locked gates of the parking lot of the shuttered clubhouse and banquet hall at 1011 N. Orange St.

They’d invited 100 guests to their wedding Saturday.

“This is a tragedy,” said Kelly, 40, who said they’d sunk $8,000 into the kaput celebration. “We had our rehearsal dinner there last Friday. They just faxed me the seating arrangement yesterday.”

Christopher R. Barclay, a trustee for Howsmith Corporation, was on the premises Wednesday. He refused to comment and ordered a reporter to leave. Rancho Cucamonga-based Dennis Baranowski, the corporation’s attorney, could not be reached.

“It’s a shame it’s closing,” said Jerry Seinturier, 56, who remembers the golf course from the 1950s. He plays in the golf league at Bourns Inc. where he works, but learned Wednesday morning that their evening round and banquet had been canceled. The greens had withered to browns over the past two years, he said, but the price was right: $10 for walkers, $15 for riders. “I have no idea where we’ll play now,” Seinturier said.

That leaves only one other 18-hole municipal golf course in Riverside, Sky Links at Van Buren Boulevard. The other city-owned course, at Fairmount Park, is nine holes.

Ken Truelock was shocked to learn that the golf clubhouse was closed for Wednesday’s noon meeting of the Magnolia Center Exchange Club, a service group. “We had a board meeting here yesterday,” he said. “I’m disappointed.”

But Kelly and Brown, who’ve been together eight years and have four children, were crushed. They paid the $837 balance several days ago on the $3,000 owed for the rental hall and appetizers.

Plus, they’ve shelled out another $5,000 for the disc jockey, photographer, flowers, minister, decorations, wedding gown, tuxedo and bridesmaids’ jewelry.

Kelly and Brown said Barclay told them to file a claim.

“We’re depleted,” said Kelly, tears running down her cheeks. “I’m extremely upset and embarrassed. We’ve got all this out-of-state family coming.”

August

08/26/2009posted byDr. Grey

Bankruptcy Filed By “Erin Brockovich” Law Firm

Bankruptcy filings are never glamorous, but sometimes those involved have themselves spent time in the spotlight for prior events or accomplishments of note.  One such entity is the law firm featured in the Julia Roberts film, “Erin Brockovich.”  From the WSJ blog:

“The personal injury law firm that handled the water contamination case featured in the movie, Masry & Vitotoe, earlier this month filed for bankruptcy protection.

According to Lisa Cohen, a spokeswoman for the firm, based in Westlake Village, Calif., the filing was the unfortunate result of a squabble for funds after the death of founding partner Edward Masry in 2005 (played in the movie by Albert Finney).

According to a report in the Dow Jones Daily Bankruptcy Review, a number of litigants had come forward alleging that Masry promised them assets and cash from the firm. His own estate and heirs also filed claims. All told, the law firm spent more than $3 million related to the claims and ensuing litigation.”

08/05/2009posted byDr. Grey

Chapter 7 Bankruptcy Filings in Riverside & San Bernardino Counties, July 2009

Chapter 7 bankruptcy filings in Riverside County and San Bernardino County for July 2009 were most numerous in the following ten Inland Empire cities:

Corona, Fontana, Hemet, Moreno Valley, Ontario, Rancho Cucamonga, Riverside, San Bernardino, Temecula, and Victorville.  Hesperia also had a high number of Chapter 7 bankruptcies filed, as did Murrieta.

Chapter 7 bankruptcy, also known as “fresh start” bankruptcy by bankruptcy attorneys, helps debtors get out from under large amounts of debt by discharging most debts owed to creditors.

July

07/09/2009posted byDr. Grey

GM Will Survive Bankruptcy, But With $48 Billion in Debt

From Bloomberg news:

“General Motors Corp., which is preparing to sell its best assets to a streamlined new entity, will carry with it liabilities of $48.4 billion, a bankruptcy judge said.

The new GM agreed to take on those obligations to benefit creditors, U.S. Bankruptcy Judge Robert Gerber in New York said in a ruling on July 7 that denied a quick appeal to opponents of the sale. The debt will be offset by GM’s most competitive assets, such as Cadillac, Chevrolet, Buick and GMC.

Gerber previously approved the sale of most of GM’s business to a U.S. Treasury-funded buyer and said the company could complete the deal any time after today at noon. The Treasury has set a July 10 deadline for the sale.

Detroit-based GM entered bankruptcy court on June 1 reporting global liabilities of $176.4 billion as of Dec. 31. The old GM will be left with GM’s remaining obligations and unwanted assets, including contaminated factory sites, a parking lot in Flint, Michigan, and a nine-hole golf course in New Jersey.

Gerber ruled on July 7 that asbestos and accident victims couldn’t block the sale or take their opposition directly to an appeals court, bypassing the intermediate district court. He said in a written decision that if GM were forced to liquidate because an appeal blocked the sale, creditors could lose $66.6 billion in value.”

For More Information, click here

07/03/2009posted byDr. Grey

Most Chapter 7 Bankruptcy Filing Cities in Inland Empire, June 2009

For bankruptcy attorneys in Riverside and San Bernardino counties, there was no shortage of Chapter 7 bankruptcies to be filed in June, 2009.  And for the second month in a row, the top ten cities in the Inland Empire with the most Chapter 7 bankruptcy filings has remained the same.

The ten cities with the most Chapter 7 bankruptcy filings in the Inland Empire for the month of June 2009 were: Corona, Fontana, Moreno Valley, Murrieta, Ontario, Rancho Cucamonga, Riverside, San Bernardino, Temecula, and Victorville. Other Inland Empire cities that also had a high number include: Hemet, Hesperia, Lake Elsinore, and Rialto.

June

06/25/2009posted byDr. Grey

Homebuilder’s Bankruptcy Leaves Empty Lots in Riverside County

From the North County Times online:

“The bankruptcy of a major regional homebuilder has left two large tracts in Southwest Riverside County with hundreds of empty lots, prompted a lender to foreclose on one and a homeowners association to demand $2 million in compensation.

John Laing Homes, of Irvine, built a links-style golf course near Lake Elsinore’s baseball stadium and said as recently as March 2008 that it planned 1,500 homes at the neighboring Summerly development. Laing also built several dozen houses at the Holiday senior community in Menifee, with plans to extend the development to nearly 200 homes.

But construction has remained stalled amid weak real estate markets.

The builder filed a Chapter 11 bankruptcy petition in February, seeking temporary relief from debt estimated between $500 million and $1 billion. The Delaware judge handling the case ordered the company liquidated in early June after concluding that the company lacked the assets to cover that debt and re-emerge successfully, according to court records. Messages left with the trustee were not returned.

A lender appears to be foreclosing on parts of the Summerly development. Lawns at a half-dozen model homes are overgrown with weeds, and notices recently posted on the houses indicate a foreclosure auction is scheduled in mid-July, a neighbor said.

Residents of the Holiday development and the 4S Ranch development in San Diego’s Ranch Bernardo neighborhood have filed claims against the builder’s bankruptcy estate.”

For more bankruptcy news, visit Curtis Law Group

06/19/2009posted byDr. Grey

Bankruptcy Protection for Eddie Bauer Holdings, Inc.

From CNN online:

“Eddie Bauer Holdings Inc. filed for Chapter 11 bankruptcy protection Wednesday, citing an inability to pay back debt.

Eddie Bauer (EBHI) emerged from Chapter 11 bankruptcy in 2005 after being spun off from former owner Spiegel Catalog, which itself sought bankruptcy protection in 2003.

Costs from the 2005 reorganization, combined with pressure from the current recession, left the company ‘with no choice but to use this process to reduce the debt load,/ said chief executive Neil Fiske in a prepared statement.’”

Eddie Bauer has 371 stores nationwide.  In San Bernardino County, there is an Eddie Bauer store in Rancho Cucamonga at Victoria Gardens.  In Riverside County, the Dos Lagos Center in Corona also has an Eddie Bauer store.  It seems that no closings are imminent, but if a new buyer takes over, however, it’s unclear what effect that would have on store closings.

For More Information on bankruptcy, click here

06/03/2009posted byDr. Grey

Chapter 7 Bankruptcy Filings in Inland Empire, May 2009

For bankruptcy attorneys in Riverside and San Bernardino counties, there was no shortage of Chapter 7 bankruptcies to be filed in May, 2009.

The ten cities with the most Chapter 7 bankruptcy filings in the Inland Empire for the month of May 2009 were: Corona, Fontana, Moreno Valley, Murrieta, Ontario, Rancho Cucamonga, Riverside, San Bernardino, Temecula, and Victorville. Other Inland Empire cities that also had a high number include: Hesperia, Perris, and Rialto.

06/01/2009posted byDr. Grey

Chapter 11 Bankruptcy Filed By GM

Attention, Riverside and San Bernardino counties, your favorite GM dealership might not be around in a few months. Today, GM filed for Chapter 11 bankruptcy, and is expected to close a number of dealerships over the course of its restructuring, which is estimated to take 2-3 months. GM dealerships in the Inland Empire include those in the cities of: Corona, Hemet, Moreno Valley, Redlands, Riverside, San Bernardino, and Victorville.

From the Los Angeles Times online:

President Obama said that pushing General Motors Corp. into bankruptcy today was a painful but necessary step to revive the legendary automaker, saving thousands of jobs and avoiding another direct hit to the struggling economy.

“‘Working with my auto task force, GM and its stakeholders have produced a viable, achievable plan that will give this iconic American company a chance to rise again,’ Obama said at the White House just hours after the company filed for bankruptcy protection this morning in a Manhattan courtroom…

‘Simply loaning GM more money, instead of taking equity in the company, would have continued to saddle GM with ‘irresponsibly large debt,’ the reason the company is in its current dire position, Obama said.

‘We are acting as reluctant shareholders because that is the only way to help GM to succeed,’ he said. ‘What we are not doing, what I have no interest in doing, is run GM.’”

For More Information, click here

May

05/05/2009posted byDr. Grey

Bankruptcy Bill DEFEATED in Senate, 51-45

The bankruptcy “cramdown” legislation that the Obama administration hoped would be a key part of its foreclosure prevention plan was defeated in the Senate on Thursday.  Bankruptcy attorneys in Riverside and San Bernardino County had hoped that this bill would pass and provide relief for their bankruptcy clients, especially those underwater on their homes, but will now have to wait indefinitely for legislative help.

From CNN online:

“The Obama administration lost a bid to add a powerful weapon in its fight against foreclosure Thursday, after the Senate voted down a proposal to allow bankruptcy judges to modify mortgages.

The defeat left many housing advocates questioning the effectiveness of the president’s loan modification plan. The so-called cramdown provision, which would allow judges to reduce mortgage principal, would have put pressure on servicers to modify loans before borrowers file for bankruptcy.

The financial industry lobbied hard against the bill, arguing that letting judges change mortgage contracts would add instability to the market and raise interest rates. Senate Republicans and some moderate Democrats were concerned about the bill’s impact and about the growing resentment among homeowners in good standing.

The bill was defeated by a 51-45 vote. The House had passed similar legislation last month.”

April

04/30/2009posted byDr. Grey

Bankruptcy Cramdown Bill Facing Defeat in Senate Today

The much anticipated legislation allowing bankruptcy judges to modify mortgages looks like it is fated not to pass the Senate.  Riverside County bankruptcy attorneys and San Bernardino bankruptcy attorneys, along with many Inland Empire residents facing foreclosure, were hoping for some relief from Congress.  A different consumer-related bill, relating to credit card regulation, looks like it will pass, however.

From Yahoo news:

“Two consumer-oriented pieces of legislation opposed by the financial services industry appear to be headed for radically different fates in Congress.

A credit card reform bill with enhanced consumer protections is progressing fairly smoothly, while a so-called cramdown bill-which would let homeowners use bankruptcy court as a an alternative to the foreclosure process-appears unlikely to become law, according to business and Congressional sources.

The difference may be as simple as the level of pubic support from the White House at a time when relations between the administration and the financial services industry are deteriorating amid tension over TARP money, bank stress tests and executive pay.

‘There will be a credit card bill,’ predicts one well-placed industry source. ‘It makes sense. Everybody in America understands the issue. If you had to pick a legislative fight, with this you win.’

‘The cramdown is a much tougher one to do, which is part of what is going into the thinking,” says veteran banking analyst Bert Ely of Ely & Co. “There’s a lot of people who don’t have a mortgage. Credit cards are more of a populist issue.’”

For More Information, click here

04/14/2009posted byAlex

Riverside County Bankruptcy for Valley Health System

Bankruptcy looks like it has struck another organization in Riverside County, this time in the health care industry.

Members of the Valley Health System board of directors on Monday tried to assure employees and constituents that the district is headed in the right direction, despite losses of nearly $3 million since the end of last year.

The board met for its first meeting since the health care district, which includes two hospitals, announced the reassignment of Hugh King, its chief financial officer and administrator at Hemet Valley Medical Center.

The district’s other hospital is Menifee Valley Medical Center.

King’s departure comes as the health care district, which declared bankruptcy in December 2007, fails to meet financial projections, according to records.

The district was projected to earn almost $2.1 million between December and February.

March

03/31/2009posted byDr. Grey

Bankruptcy Bill Stalled in Senate, Negotiations Underway

It seems that the Bankruptcy Bill that passed in the House, is now stalled in the Senate…

From Curtis Law Group’s news section:

“Congressional Democrats in the Senate are trying to pass a bankruptcy bill, coined as a “cramdown” bill by opponents of the legislation, which aims to help stem the tide of foreclosures by giving bankruptcy judges the discretion to modify mortgages for homeowners who otherwise cannot afford their homes.

The House of Representatives have already passed a version of this bill, but Republicans are holding it up in the Senate. The Senate has decided to put off the vote until later in April, while changes to the bill are negotiated.”

For More Information: click here

03/21/2009posted byDr. Grey

New Audit Tool To Help Bankruptcy Judges, Trustees

It seems that allowing bankruptcy judges to modify mortgages is leading to entrepreneurial ventures by firms seeing the new change as an opportunity, if this California’s auditing company’s new product is any indiacation.  From Yahoo news:

“A specialist in providing forensic loan audits for attorneys and financial institutions has developed a new product designed for bankruptcy attorneys, judges and trustees, who will soon be operating under a law allowing judges to restructure residential mortgages in bankruptcy proceedings.

Industry analysts predict that the pending legislation, which has passed the House and is expected to win Senate approval, will produce a surge in bankruptcy filings, as financially-pressed borrowers seek bankruptcy protection in an effort to avoid foreclosure…

Audit reports can consist of approximately 100+ pages of information. In order to expedite the review process, a concise, two-page summary of the audit will highlight all relevant information about the transaction and the parties involved in it.”

For More Information, click here

03/12/2009posted byDr. Grey

Riverside RV Company Files for Chapter 11 Bankruptcy

A Riverside RV company, well known for years as a giant in the industry, has fallen victim to the economic crisis and the company’s bankruptcy attorney has filed for Chapter 11 bankruptcy on its behalf.

“Fleetwood Enterprises Inc., the iconic Riverside-based maker of recreational vehicles and manufactured housing that has ferried road-trippers and housed owners for 59 years, has filed for Chapter 11 bankruptcy.

The company announced Tuesday morning that it would keep day-to-day operations of its businesses going while it shops for a buyer.

Its travel trailer division though will be shuttered, affecting 667 employees nationwide including 12 at the company’s Rialto service center.

The company laid off another 65 Inland workers in corporate positions Monday. More than 600 workers remain in Riverside.”

03/11/2009posted byDr. Grey

Inland Empire Chapter 7 Bankruptcy Filings, February 2009

For bankruptcy attorneys in the Inland Empire, there were no shortage of Chapter 7 bankruptcies that needed to be filed in February, 2009. The amount of Chapter 7 bankruptcy filings in the Riverside Bankruptcy Courthouse in February, which serves both Riverside County and San Bernardino County, totals 1,352 — an increase from January’s 1,120 Chapter 7 filings.

The ten cities with the most Chapter 7 bankruptcy filings in the Inland Empire for the month of February 2009 were: Corona, Fontana, Hemet, Moreno Valley, Murrieta, Ontario, Rancho Cucamonga, Riverside, San Bernardino, and Temecula. Other Inland Empire cities that also had a high number include: Perris and Hesperia.

03/06/2009posted byDr. Grey

House of Representatives Passes Bankruptcy Bill

Attention, Inland Empire bankruptcy attorneys — the number of rising bankruptcies in the near future may not be due to the economy alone.  Consumer bankruptcies, especially Chapter 13 bankruptcies, may increase do to the new Bankruptcy Bill that has just passed in the House.  How the Senate may change the bill remains to be seen, but now we know how the House wants it to look.

From the AP:

“A plan to give debt-strapped American homeowners a chance to lower their mortgage payments through bankruptcy courts won House of Representatives approval Thursday as a report revealed that foreclosures and past-due home loans hit a record 5.4 million last year.

A survey by the Mortgage Bankers Association released Thursday found that nearly 12 percent of U.S. homeowners were in foreclosure or behind on their payments at the end of 2008.

The legislation, part of President Barack Obama’s housing rescue plan, is facing a much tougher road in the Senate amid the same industry opposition and reservations from moderate Democrats that nearly derailed it in the House.

The House passed the bill 234-191 mostly along party lines, and the Senate could consider it within weeks.

The legislation would give bankruptcy judges — who now can modify loans for such items as cars and student loans but not for primary residences — new power to reduce the interest rate and principle on a home mortgage.

Supporters regard the threat of a mortgage modification in bankruptcy as a crucial tool to prod banks to negotiate with homeowners for more affordable terms. Critics argue the measure will create a flood of bankruptcy filings that ultimately will drive up mortgage rates and further destabilize the battered housing market.

The House bill is the product of a compromise between dueling Democratic factions. A group of moderates broke with liberal backers last week and refused to support the measure unless it included several changes the banking lobby had sought.

It took days of intense bargaining with an assist from Obama’s team to get the measure back on track. The president dispatched his housing secretary, Shaun Donovan, to a closed-door meeting in the Capitol to explain to restive Democrats how the measure fits in with the $75 billion housing initiative Obama unveiled this week.

The resulting compromise would bar homeowners from getting loan modifications in bankruptcy court unless they have first tried to work out a deal with their lenders and have no other way of affording their mortgages.

It also would let judges consider whether the home loan company had made a reasonable offer to change the terms to those embodied in Obama’s housing plan — allowing the homeowner to reduce his monthly payments to about one-third of his income.”

For More Information, click here

03/05/2009posted byDr. Grey

Congress Set to Vote on Bankruptcy Bill Today

Congress is scheduled to vote today on altering the Bankruptcy code to allow judges to modify mortgages. This vote about a potential change in bankruptcy law has Riverside County and San Bernardino County bankruptcy attorneys and their bankruptcy clients watching attentively. From the McClatchy Tribune Wire Service:

“The U.S. House is expected to vote today on a proposal that would allow judges to modify mortgages of people who file for bankruptcy — and could bring a new wave of filings, local court officials say.

The proposed “cramdown” legislation has been controversial — lenders, for one, have opposed it. But bankruptcy attorneys and credit counselors say it could be a smart solution, helping struggling homeowners and making sure lenders get at least a portion of their money back.

It’s part of a broader $75 billion housing plan, which President Obama’s team outlined Wednesday. The plan features cash incentives for mortgage holders who cut deals with borrowers for new, more affordable terms.

The bankruptcy provision is expected to go to the Senate soon after the House vote, and rules there will make passage more difficult.

Under current laws, bankruptcy judges lack the authority to modify most mortgages. They can approve modifications for credit-card debt and other loans, including second-home mortgages. In Chapter 12 cases, usually filed to save family farms, mortgages can be adjusted to reflect the current value of a debtor’s home and farm, rather than the original loan amount.

The bill would allow bankruptcy judges to alter the terms of a mortgage, a process known to the industry as ‘cramdown,’ if no other options remain for homeowners. Judges could extend the payment period or lower the value of the mortgage on the home to the existing market value.”

For More Information, click here

03/02/2009posted byDr. Grey

Bankruptcy Bill Delayed By Debate On Loan Modification

Riverside County and San Bernardino County homeowners seeking relief from bankruptcy judges to modify their mortgages for them and save them from foreclosure are holding their breath, as Congress debates who deserves to receive this kind of help from bankruptcy judges.  Whether or not a bankruptcy attorney has another tool to help Riverside County residents save their homes from foreclosure hinges on the outcome of this debate.  Whether you own a home in Corona or a condo in Rancho Cucamonga, this legislation may affect you.

From Yahoo news:

“A dispute among House Democrats stalled legislation Thursday to let bankruptcy judges reduce the principal and interest rate on mortgages for debt-strapped homeowners.

The measure, backed by President Barack Obama, is the most controversial part of a broader housing package that had been expected to pass the House this week.

It hit a snag after a group of moderates expressed concerns in a closed-door meeting of House Democrats about how the bill would affect homeowners who are still struggling to make their mortgage payments.

The banking industry has lobbied hard against the measure, mounting a successful multimillion-dollar effort last year to kill it.

This year, mortgage industry players who are scrambling to narrow the scope of the measure to reduce its potential cost for banks have won some key concessions. House Democrats agreed to limit the measure to existing loans made before the bill is enacted and to borrowers who can show they tried other ways of modifying their home loans before resorting to bankruptcy, among other changes.

But banks want to go much further, restricting the bill only to subprime or other exotic loans.

Centrist House Democrats who have been working in tandem with the financial services industry to scale back the bill balked at supporting it on Thursday after a news report suggested that Sen. Dick Durbin, D-Ill., the lead sponsor of the bankruptcy measure in the Senate, was willing to limit it only to subprime mortgages. The Senate is expected to take up the legislation within two weeks.”

2010

February

02/25/2010posted byDr. Grey

Competition Continues For General Growth Properties

Post from the Wall Street Journal regarding the General Growth bankruptcy:

“The takeover battle for mall owner General Growth Properties Inc. reached a boiling point Wednesday as General Growth unveiled a deal with Canadian property investor Brookfield Asset Management Inc. even as Australian mall owner Westfield Group considered entering the fray.

Westfield, which owns 119 malls in the U.S., Australia and Britain, signed a nondisclosure agreement this week to begin discussions with General Growth about a possible offer, people familiar with the matter said.

Westfield has $8 billion of borrowing capacity on hand, and is thus far acting alone, these people said.

As Westfield deliberated, General Growth laid out a plan …”

General Growth Properties owns Galleria at Tyler in Riverside, Moreno Valley Mall, and Redlands Mall in the Inland area. A bankruptcy judge will consider all  options for the hearing set for March 3.

Follow news about General Growth Properties at the Curtis Law Group Bankruptcy Blog.

2009

02/25/2009posted byDr. Grey

Cramdown Bankruptcy Bill Uncertain to Help Homeowners

Relief for Riverside County homeowners under President Obama’s cramdown bill is far from certain.  Today there is an indication that leading Republican representatives, mortgage industry trade groups and mortgage lenders have joined forces to oppose relief for homeowners provided by the cramdown bill expected to be introduced Thursday of this week.  If Republic representatives and mortgage lenders successfully oppose the Democrat-led relief effort, Riverside County bankruptcy attorney practitioners will not have the additional relief offered and will only have limited ability to help homeowners reduce their mortgage debt in bankruptcy.

From the Hill online:

“The financial services industry and House Republicans are fighting back against a bill pushed by House Democrats that would empower bankruptcy judges to write down mortgage interest rates and principal.

The bill could be up for a vote on Thursday and is part of a broader effort to invigorate the housing market and re-brand a federal program begun last year to reduce foreclosures that has had scant results…

The industry says the bill is “overly broad” in allowing too many homeowners to head to bankruptcy courts; it also does not limit the size of a mortgage that can be reduced.

“The housing market is already unstable and enacting cramdown legislation would make things worse by adding even more risk to the mortgage market, effectively undermining efforts by Congress and the administration to stabilize the housing market,” said a dozen trade associations in a letter to House Speaker Nancy Pelosi (D-Calif.) and Minority Leader John Boehner (R-Ohio).

The American Bankers Association, Mortgage Bankers Association and Financial Services Roundtable sent individual letters on Monday to Congress and the administration.”

For More Information, click here

02/24/2009posted byDr. Grey

Legislation on Bankruptcy Judges Modifying Loans Introduced

Riverside County and San Bernardino County bankruptcy attorneys will be able to help save the homes of more of their bankruptcy clients, if the new Bankruptcy Bill introduced in Congress today is passed.

Press Release from the House Financial Services today:

“The House Judiciary Committee and the House Financial Services Committee today released details of the combined housing bill the House may consider this week. The measure will combine the Judiciary Committee provisions to allow bankruptcy judges to modify mortgages on primary residences, and the Financial Services Committee legislation which provides a servicer safe harbor, Hope for Homeowners improvements, FHA changes, and reforms to the FDIC insurance fund. The new bill, H.R. 1106 could be on the floor as early as this week.”

For More Information, click here

02/19/2009posted byDr. Grey

Obama’s New Housing Plan Doesn’t Address Bankruptcy Law

Although President Obama’s new housing plan may be “loaded with incentives for homeowners, mortgage servicers, lenders and banks” to modify the loans that are leading so many Riverside County residents to foreclosure and bankruptcy, what the plan does not do is address the so-called “cramdown” proposal — that Bankruptcy judges be allowed to modify home loans. This change in bankruptcy law would be a boon for the clients of Riverside County bankruptcy attorneys; it would help many Chapter 7 bankruptcy clients keep their homes. This is not only an issue for homes in Riverside and San Bernardino County areas like Corona and Chino, but also in higher income areas like Rancho Cucamonga, where homes with high mortgage payments have been forcing even high income earners into seeking a bankruptcy attorney or leading to foreclosure. The best that can be said about this housing plan, at least with regard to bankruptcy law, is that it does not “rule out” the possibility that a future bill might tackle this issue.

Riverside County has been waiting for such a bill for a long time and it looks like the wait shall continue…

02/12/2009posted byDr. Grey

Going Down? Elevator Music Company Files for Bankruptcy

This is one bankruptcy that Riverside County residents may be ambivalent about, depending on their taste in music.  Musak, whose music fills elevators and “on hold” messages for phone systems, is filing for Chapter 11 bankruptcy. Apparently, the global economic crisis that has led many Riverside County residents to seek a bankruptcy attorney is not the culprit this time. Musak’s CEO said that debt from a decade ago is the true source of their need to file for bankruptcy protection.

From CNN online:

“Muzak, the company that put pop, string-filled arrangements of rock songs in your elevator, filed bankruptcy papers Tuesday after it missed a $105 million payment to creditors.

The pipeline of easy listening will continue to flow as Muzak restructures its debt during the Chapter 11 process, the company said.

“Muzak is a solid business with an outstanding customer base, but we are burdened with substantial debt obligations established over a decade ago,” Muzak CEO Stephen Villa said.

Muzak’s cash flows doubled in the last three years, Villa said, “demonstrating that our business continues to perform well even in today’s challenging environment.”

Along with its ubiquitous elevator offerings, Muzak and its 14 affiliates — all privately owned — produce on-hold messages and install sound systems, digital signs and drive-thru systems for retail businesses.

Bankruptcy documents showed Muzak owes its largest creditor — U.S. Bank, as indentured trustee — about $370 million, nearly all of it due this year.

Muzak spokeswoman Meaghan Repko said the filing was voluntary and in cooperation with the creditors.

The weakened global economy was not a factor, she said, noting the company’s profits have been rising in recent years.

The Chapter 11 protections will allow Muzak time to restructure the debt, which was incurred a decade ago, she said.”

Riverside County, with cities such as Corona and Riverside that abound with commercial buildings and offices, has many elevators and phones that have been using Musak for years.

02/10/2009posted byDr. Grey

Couple Who Struck it Rich in Real Estate Forced into Bankruptcy

Mr. and Mrs. Robert Dyson have been forced into bankruptcy.  According to their bankruptcy attorney, the real estate market’s dismal state during this economic crisis was the culprit.  As news about record foreclosures and bankruptcies in Riverside and San Bernardino County cities such as Corona, Rancho Cucamonga, and Riverside, it is not too surprising that the real estate market that had given so much, ended up taking away as much as it gave.

From the North County Times online article:

“A couple who made a name and fortune in high-class coastal real estate have crashed into bankruptcy and are asking a court to erase more than $40 million in debt, including $625,000 that stemmed from alleged misuse of a helicopter loan.

According to court filings, property records and interviews, the couple, Robert and Loraine Dyson, shut down their Solana Beach real estate brokerage, an affiliate of Sotheby’s International Realty, in October. They also filed for personal bankruptcy and have apparently scotched plans to develop an equestrian resort and estates in central Riverside County…

The Dysons’ financial unraveling was as spectacular as their ambition. The couple own a $7 million estate in Rancho Santa Fe and —- until recently —- several other residences in the most exclusive areas of the Southern California coast and the San Jacinto Mountains.

Press releases from their real estate agency reported billions of dollars of annual sales. Their charitable foundation parceled out tens of thousands of dollars.

The Dysons’ slide into bankruptcy followed an attempt to transform themselves from high-end real estate agents into high-end developers at what may have been the worst possible time.

They put some $30 million into property in the foothills of the San Jacinto Mountains starting in late 2005, with plans for equestrian estates that would eventually ramble over nearly 2,500 acres…

They filed for Chapter 7 bankruptcy on Oct. 30, estimating their debts at $50 million to $100 million and their assets at $1 million to $10 million. A debtor who qualifies for Chapter 7 can usually keep a car and other necessities, subject to limits on their value; other assets are sold off to cover portions of the debt, and the remaining debt is wiped away.

The trustee supervising their bankruptcy recommended in December that the couple abandon the Rancho Santa Fe home that they bought in June 2005 because debt and liens account for nearly its entire $7 million value. A later filing by the trustee recommended they give up a $90,000 leased Porsche sports car and their $3.2 million home in Palm Desert, which is in foreclosure…”

For More Information, click here

02/05/2009posted byDr. Grey

Chapter 7 Bankruptcy Filings in Inland Empire for January 2009

The search for an Riverside County or San Bernardino bankruptcy attorney to file a Chapter 7 bankruptcy was made by hundreds of Inland Empire residents each and every month in 2008. This year looks like more of the same, and possibly much more of the same.  In January 2009, there were at least 1,120 Riverside and San Bernardino County residents who required a bankruptcy attorney to file for Chapter 7 on their be half.

The Inland Empire cities with the most Chapter 7 bankruptcy filings for January, 2009 are as follows:

Corona, Fontana, Moreno Valley, Murrieta, Ontario, Rancho Cucamonga, Riverside, San Bernardino, Temecula, and Victorville.

Other Riverside and San Bernardino County cities that also had a high number, especially considering their relative population, include Chino, Lake Elsinore, and Rialto.

January

01/30/2009posted byDr. Grey

House Passes Stimulus Bill, But Without Bankruptcy Provisions

The House of Representatives passed the $819 billion stimulus bill on Wednesday, a monster bill that allots money towards major infrastructure, education, health care, & unemployment concerns. One concern it does not address, however, is stemming the tide of foreclosures. From the Colorado Independent:

“Congressional Democrats hoping to use the economic stimulus package to force lenders to refinance troubled mortgages have met an unlikely opponent: President Barack Obama.

Many Democrats, including Obama, have long-supported the strategy of empowering bankruptcy judges to alter the terms of primary mortgages to prevent foreclosures. But White House officials have said they don’t want the bankruptcy provision in the stimulus bill for fear of alienating Republicans, most of whom oppose the change…Housing advocates have long-pushed to empower bankruptcy judges to reduce, or “cram down,” the balance of primary mortgages, as well as other terms of the loans, to keep homeowners from suffering foreclosure. That legal avenue is currently available for loans on commercial property, yachts, vacation homes — almost anything but primary mortgages, which were singled out for exception under bankruptcy law.”

Although both President Obama and Speaker of the House Nancy Pelosi have made it known that bankruptcy reform is a priority, and that they will make sure to attach bankruptcy reform provisions to a bill that is a “sure-fire” pass, it is unclear how many homes will foreclose in the meantime — and how many more residents of Riverside County and San Bernardino County, from cities like Rancho Cucamonga and Corona, will seek a bankruptcy attorney because of it.

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01/26/2009posted byDr. Grey

Redlands Bank Insolvent, Will Likely Close Doors Soon

Insolvency and bankruptcy is not only affecting multi-billion dollar corporations and their hot shot bankruptcy attorneys. The town of Redlands, located in San Bernardino County, is known for it’s quaint downtown area, as well as it’s boutique shops and family-run restaurants. So word that its very own 1st Centennial Bank is insolvent, and likely to close, is more than just another business news item for these residents. When politicians talk about trouble on Wall Street hurting those on Main Street, they are talking about towns like Redlands. We will keep you updated on whether 1st Centennial files for bankruptcy, and if so, what chapter of the code their bankruptcy attorney advises them to file under.

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01/16/2009posted byDr. Grey

Circuit City’s Bankruptcy to End in Liquidation

After filing for bankruptcy in November, Circuit City will now have to shut down completely and liquidate its’ stores and assets after failing to find a buyer. Only a week ago, according to the New York Times report, there were two potential buyers in talks with Circuit City, but it was not able to reach an agreement with its creditors and lenders in time.

From the New York Times online:

“The demise of Circuit City, while not surprising given its declining sales, is part of a radical shift taking place in American retailing. Weak chains — unable to weather the freeze-up in consumer spending, and choked by tight credit markets — are shuttering their doors.

Last year, a raft of retailers including Boscov’s, Sharper Image, Mervyns, Linens ’n Things, Whitehall Jewelers and Steve & Barry’s filed for bankruptcy protection. This week alone, Goody’s Family Clothing and Gottschalks Inc. also filed. Many more retailers are expected to follow suit as they run out of working capital or are unable to finance their debt. But emerging from bankruptcy is harder than ever because of changes in the bankruptcy code and vise-like credit markets.

Indeed, Wall Street analysts said in November that the prospects of long-term survival for the Circuit City were bleak. Months of declining sales during the recession sent the company over the edge, although its problems go back a decade, from buying cheap real estate leases in inferior locations to laying off its most experienced sales staff. The latter saved money but cost the company employee morale and countless customers.

When the retailer filed for Chapter 11 bankruptcy in November, its shares had lost more than 90 percent of their value since the beginning of 2008.

The company is still awaiting final approval of the liquidation from federal bankruptcy court.”

As Circuit City stores will now be shut down, Inland Empire residents should make those last few trips to their nearby store. Circuit City locations in Riverside County and San Bernardino County are in the following cities: Rancho Cucamonga, Montclair, Moreno Valley, San Bernardino, and Temecula.

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01/09/2009posted byDr. Grey

Chapter 7 Bankruptcy Filings in Riverside County & San Bernardino County, December 2008

Bankruptcy lawyers are needed in many cities, but perhaps in some more than others.

The Riverside County and San Bernardino County cities with the most chapter 7 bankruptcy filings for the month of December, 2008, are as follows: Corona, Fontana, Moreno Valley, Murrieta, Ontario, Rancho Cucamonga, Riverside, San Bernardino, Temecula, and Victorville.

Riverside County and San Bernardino cities that also had a high number, especially considering their relative population, include Chino, Chino Hills, Hemet, and Menifee.

The total number of Chapter 7 bankruptcy filings in the Riverside Bankruptcy Courthouse, for the month of December 2008 was 1,254.

01/08/2009posted byDr. Grey

Citigroup, Senators in Talks to Let Bankruptcy Judges Modify Mortgages

From DSnews online:

“New York-based Citigroup Inc. endorsed the proposed Senate bill that would give bankruptcy judges the power to modify mortgages with so-called ‘cramdowns,’ to force lenders to lower the burden on homeowners on Thursday, according to a story in The Wall Street Journal.

The “Helping Families Save Their Homes in Bankruptcy Act” was reintroduced to the Senate earlier this week by Illinois Democrat Sen. Dick Durbin, the Senate’s second-ranking Democrat. Durbin’s been working on the legislation for more than a year.

The deal, Senate staffers told The Wall Street Journal, is likely the first of several measures being crafted this year that propose to trim the principal owed by homeowners underwater on their mortgages.

‘This is the breakthrough we’ve been waiting for, to have a major financial institution support this legislation will create an incentive for others to come our way,’ Durbin told the Journal. ‘I want to congratulate Citi for being open-minded about this [and] playing a major leadership role.’

As written, the bill would allow judges to:

– Extend the length of repayment to lower monthly payments
– Replace variable interest rates with fixed rates
– Waive the bankruptcy counseling requirement for homeowners facing foreclosure to get homeowners in court faster
– Allow judges to waive prepayment penalties
– Maintain debtors’ legal claims against predatory lenders while in bankruptcy

A new component, added as a concession to lenders, would eliminate consumer loan forgiveness for lenders who have violated the Truth in Lending Act during bankruptcy proceedings, and would only subject lenders to fines.

Now that Citigroup has endorsed the deal, lawmakers hope other financial institutions will also offer their support. According to the Journal, some banks have indicated they would support the bill, marking a change of position for the industry, which previously argued cramdowns would raise the cost of mortgages for all buyers and overwhelm bankruptcy courts.”

Bankruptcy judges, and every bankruptcy attorney worth his salt, are hoping this measure passes, for the sake of millions of bankruptcy mortgage holders, thousands of whom live in Riverside County. As Riverside County bankruptcy attorneys can attest, the Riverside Bankruptcy Courthouse has seen it’s fair share of cases that could have been helped by this legislation. Here’s hoping Citibank leads the charge to finally get it done, and finally stem the tide of foreclosures in Riverside County, San Bernardino County, and across the country.

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01/06/2009posted byDr. Grey

Bankruptcy Filings Rise, Especially in Riverside Courthouse

From the Californian online:

“More Americans sought to discharge debts in bankruptcy court last year, and the numbers of local debtors entering bankruptcy more than doubled from 2007, according to court filings and local attorneys.

About 1.06 million individuals sought personal bankruptcy protection last year, an increase of more than 30 percent over 2007, according to the American Bankruptcy Institute, a research group based in Alexandria, Va.

A total of 18,900 residents and corporations filed initial petitions at the Riverside division of the U.S. Bankruptcy Court, compared with 8,860 in 2007. The division covers Riverside and San Bernardino counties.

A prominent bankruptcy attorney in Temecula said the increase has been even more dramatic in foreclosure-wracked Southwest County.

Bankruptcies filed under Chapter 11 of the U.S. Bankruptcy Code, which allows a corporation to put off debt while it reorganizes, rose by 530 percent in the two-county district, to 297.”

A Temecula attorney noted that there was a “ripple effect” from the economic distress, especially in construction industry:

“In August, a group of large lenders filed an involuntary bankruptcy petition against Woodside Homes Inc. in Riverside. Court filings showed the Utah-based builder owing some $680 million, including several hundred thousand dollars to local subcontractors. Woodside has built homes in the Wolf Creek development in southern Temecula; Audie Murphy Ranch, its master-planned community of 2,000 homes north and south of Newport Road in Menifee, has been repeatedly delayed.

Other filings included:

– WSR Publishing Inc., a Murrieta company whose monthly Widescreen Review covers home-entertainment products. The company continues to publish in print and at www.widescreenreview.com. Owner Gary Reber said his company’s woes stem mainly from the weakening market for consumer electronics. WSR also had difficulty refinancing some of its debt, Reber said.

– It’s About Time … Scrapbooks & More Inc. of Murrieta filed for Chapter 7 liquidation in mid-December.”

As the Inland Empire well knows, and as bankruptcy lawyers in Riverside and San Bernardino counties can attest, the economic domino effect leaves few industries untouched. With more than double the number of bankruptcy filings in the Riverside Courthouse in 2008 than in 2007, consumers and businesses alike are hurting. Whether you live in Corona or Rancho Cucamonga or Murrieta, your community is not immune from the effects of this downturn. We can only hope that new policies and the stimulus package in the works can prevent the dominoes from continuing to fall.

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