California Bankruptcy Lawyer Blog

Sacramento Bankruptcy Attorney discusses the Phoenix Coyotes Chapter 11 Bankruptcy Filing

The Phoenix Coyotes recently filed for Chapter 11 Bankruptcy protection much to the chagrin of the NHL. The team has accumulated approximately $73 million in debt over the past 3 years. As part of the Coyotes’ chapter 11 reorganization plan, the Coyotes’ owner Jerry Moyes has proposed selling the team to James Balsillie, the Co-CEO of Research In Motion (RIM) Ltd. Balsillie has offered to pay $212.5 million for the team, which would pay 100% of the teams secured debt and $95.5 million to unsecured creditors. However, as a condition of the sale Balsillie wants to be able to relocate the team to Ontario, Canada.

This case is interesting because, as a member of the National Hockey League, the Coyotes would normally need the permission of the NHL and the other 29 team owners to sell and relocate the team. Moyes has attempted to circumvent this process by going directly to the Bankruptcy Court and proposing that the team be sold to Balsillie. The NHL is investigating the propriety of the Coyotes’ bankruptcy filing and vigorously contesting the sale of the Coyotes to Balsillie. Statements from the NHL have made it clear that the NHL intends to keep the team in Glendale, Arizona. The NHL intends to keep the sale of the Coyotes out the jurisdiction of the bankruptcy court and return the issues of relocation and sale to the League’s purview.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down, stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your needs.

San Jose Bankruptcy Attorney discusses Lien Stripping in a Chapter 11 bankruptcy or a Chapter 13 bankruptcy

Debtors filing for Chapter 11 bankruptcy or Chapter 13 bankruptcy protection have the option to avoid junior secured liens on their property if their property is underwater. For example, if a debtor’s home has a first mortgage of $100,000 and a second mortgage of $30,000 but the property is only worth $80,000, there is no equity in the home to secure the lender’s second mortgage. Bankruptcy law permits debtors to “strip off or lien strip” the $30,000 second mortgage and convert it to unsecured debt. Once the loan has been “stripped” the debtor’s property will solely be secured by its first mortgage of $100,000.

The Obama Administration proposed a plan that would give bankruptcy courts the authority to “cram down” a debtor’s first mortgage to the fair market value of the property. In the example above, since the property is only worth $80,000, the first mortgage would “cram down” from $100,000 to $80,000 to reflect the property’s current value. That proposed legislation is currently stalled in Congress, but debtors remain hopeful for future relief.

Debtors who have already filed for bankruptcy protection and had their cases discharged are not precluded from this benefit. A debtor can petition the court to reopen their bankruptcy case in order to exercise their right to bring a motion to avoid a lien.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down, stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your needs.

Fremont Bankruptcy Attorney discusses the benefits of a Chapter 11 bankruptcy filing as demonstrated by Z Gallerie

Z Gallerie, the 30 year old home furnishings chain, filed for Chapter 11 bankruptcy in April of this year. The filing allowed the company to voluntarily reorganize its operations to increase its bottomline by closing under-producing stores and relieving itself from liability on those leases. Z Gallerie also closed a distribution center to cut away additional dead weight. The company has sought the court’s approval for use of “cash collateral” to continue paying its vendors and employees during its reorganization process.

The company has not announced any additional store closings since its initial purge in March, and should be able to continue operating its remaining stores, website sales, and honor existing company programs. Z Gallerie’s revamping of its organization by disposing of poor performing stores will likely enable it to triumphantly emerge from Chapter 11 bankruptcy.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down, stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your needs.

San Jose Bankruptcy Attorney discusses Requirements and Restrictions for Chapter 7 and Chapter 13 Bankruptcies

If you are considering filing for Chapter 7 bankruptcy (liquidation) or Chapter 13 (repayment plan) bankruptcy protection there are a few requirements and restrictions that you should be aware of. While this is not intended to be an exhaustive list, it highlights some of the critical factors that all consumers should know.

1. Credit Counseling Requirement:

a. Prior to filing his/her petition for bankruptcy under any chapter the debtor must complete a Credit Counseling Course. The cost for these classes can range from $30.00 to $50.00 and must be completed prior to filing for bankruptcy.

2. Timing Requirement:

a. A debtor who has previously been discharged in a Chapter 7 must wait 8 years to file another Chapter 7 petition.

b. A debtor who has previously been discharged in a Chapter 13 must wait 4 years to file a subsequent Chapter 7 bankruptcy petition.

c. A debtor who has previously been discharged in a Chapter 13 bankruptcy must wait 2 years to file a subsequent Chapter 13 petition.

3. Residency Requirement:

a. A debtor must reside in a state for a period of 2 years prior to filing the bankruptcy petition to qualify for that state’s exemption laws. This law is intended to prevent people from moving to another state for the sole purpose of obtaining more favorable exemption laws.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down, stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your needs. Please feel free to complete our free bankrupcty evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

Sacramento Bankruptcy Attorney discusses Chrysler, Vick and Cram Downs in Bankruptcy

Some creditors are balking at Chrysler’s Chapter 11 reorganization plan. They believe they would receive more in a Chapter 7 liquidation plan. In order for Chrysler’s reorganization plan to be approved by the bankruptcy court over the objections of a creditor class, the plan must “crammed down.” Meaning the bankruptcy court will have to tell the impaired classes that have refused to agree to the reorganization plan that they are out of luck. Recently, the Court refused to “cram down” Michael Vick’s reorganization plan because the Court did not believe the plan was feasible, without a guarantee that Vick would be making a high figure salary as a professional football player.

However, Vick didn’t have the backing of the U.S. Government. The Obama administration has proposed to finance Chrysler’s restructuring with $10.5 billion in loans. Canada would contribute $2.4 billion of that loan amount, but the rest would come from the taxpayers’ coffers. In addition to receiving another $10.5 billion in loans, Chrysler would also likely be relieved of its responsibility to repay the $4.0 billion loan previously made by the federal government.

The intent of the plan is to get Chrysler in and out of bankruptcy as quickly as possible. With the continued assistance of the federal government, the Court will likely approve Chrysler’s reorganization plan over the creditors’ objections.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down, stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your needs. Please feel free to complete our free bankrupcty evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

San Francisco Bankruptcy Attorney Talks About Life After Bankruptcy

One of the biggest fears by any debtor is that once bankruptcy is filed, it will lead to a life of horror. Debtors believe that if they file bankruptcy their names will carry a scarlet letter to be shunned by all reputable lenders. Debtors often believe they will be stuck going to shady characters who will charge outrageous interest rates with horrendous consequences equivalent to the fabled leg breaking stories from loan sharks if the file for bankruptcy. Aside from very good fiction, these stories are hardly ever the truth.

Most debtors feel a sense of relief and cautious optimism after the bankruptcy is completed, but it takes time. Sometimes it is hard for debtors to believe that the Bankruptcy court can wipe away tens of thousands of debt without ever speaking to the debtors. There is no “big showdown” where the creditor comes and preaches fiscal irresponsibility while pointing a finger of righteousness. The bankruptcy judge will not wave his gavel demanding to know how the debtors could let this happen. After months (sometimes years) of receiving “certified” letters demanding money with threats of lawsuits or phone calls from credit collectors who will name the debtor’s employers, friend and family as people they will call, the debtors receive a simple letter from the Bankruptcy court stating that their bankruptcy is complete and a discharge was granted. The phone calls stop and mail is just regular junk mail. Debtors have been known to call their bankruptcy lawyers repeatedly asking if there is anything else they can do to help bankruptcy, as if they wanted the nightmare to continue.

After the discharge, a very peculiar event happens. The Debtors begin to receive credit card applications. Their credit scores begin to rise. Some even start to save money. Now that the debtor does not have any more debt, they no longer have missed payments or higher than average debt. They factors would have normally lowered their credit scores are gone and, instead, they have positive events like paying their car loans on time. Credit card companies love giving bankruptcy debtors credit cards because bankruptcy cannot be filed again for another 8 years. The debtor can even purchase a new car within the first year of bankruptcy.

Bankruptcy was meant to give debtors a fresh start which is what happens. It is unfortunate that the media makes bankruptcy sound like such a scary thing. If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down, stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your needs.

San Jose Bankruptcy Attorney Talks about the Chrysler Bankruptcy

On April 30, 2009, Chrysler’s filed for a Chapter 11 Bankruptcy. The Chrysler Bankruptcy would be a huge undertaking because the company is one of the big three automakers in the United States. To see how this bankruptcy will work, it is helpful to look at a different large bankruptcy. In late 2008 and early 2009, the Circuit City Bankruptcy rocked the retail world because it signaled the shut down a major player in products that consumers purchase on a regular basis. Circuit City filed for Chapter 11 bankruptcy which is what Chrysler would do. Under the Chapter 11 bankruptcy, Circuit City was able to continue business including selling during the holiday season and pay their employees for the work. Circuit City was given protection against creditors while it looked for a new source of capital or a buyer. Neither could be found so Circuit City had to be shut down.

In Chrysler’s case, they have Chapter 11 creditor protection while it looked for solutions to its problems. Based on reports, Chrysler had to file for Bankruptcy so that it could close the investment from Fiat of Italy. Fiat had previously been identified as a potential buyer ranging from a 20 percent to 35 percent stake in the company. Chrysler owes $6.9 billion to lenders and once a few begin collections, could cause the whole company to shut down. (A car cannot be sold unless it has all the parts, like the wheels) The Chapter 11 protections are needed because Chrysler needs to continue operating while the deals are being worked out.

The straw that broke the camel’s back and forced Chrysler into bankruptcy is being blamed on a small minority of creditors. The lenders originally wanted 65 cents to the dollar with a 40 percent equity stake in whatever company Chrysler becomes. The government wanted the lenders to get 22 cents on the dollar with 5 percent of the new company. The key note was that government came to the table with money to help finance any deals but wanted to spend as little as possible while the lenders want as much as possible. The risk for the lenders was that the deal fell apart and Chrysler was liquidated similar to Circuit City where they could receive much less than 22 cents on the dollar and only after items have been auctioned off. (One can imagine that there are few buyers of car building plants in the US) The other risk was that under Chapter 11 laws, Fiat (or any other buyer) can choose which assets to keep and which to get rid. This pits the lenders against each other as the owners marquee property can command a premium while the undesired debts are left with hats in hand asking for bail outs.

In the end, most of the major lenders agreed to the government’s proposal prior to bankruptcy but a few minority lenders held out. The final group of lenders who withheld approval were called “speculators” by President Obama. Many of the lenders were hedge funds and boutique investment funds who alleged that the big banks were yielding to the government’s proposal because of prior bailout money. Now that bankruptcy is filed, the decision as to whether Chrysler’s plan is accepted or not will lie with the Bankruptcy Judge instead of the lender’s hands.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down, stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your needs.

San Francisco Bankruptcy Attorney Discusses Loan Modifications

There are many different variations of “loan modifications” being used in the market today. The most traditional loan modification is one where the lender changes the terms of the loan to accommodate the borrower. This usually occurs when the borrower is in a financial bind and has defaulted on their loan. The borrower does not have the funds to fix the situation by paying their arrears or they cannot make their current payments due to a financial hardship. The lender then modifies the loan (which is different from a refinance) to accommodate the borrower. A loan modification is discretionary and need not be approved by the banks. The modifications can include a reduction of interest rate, decrease in principal of the loan, or adding any arrears to the principal and extending the loan. Recently, President Obama released several billions of dollars to the banks to encourage them to modify certain loans.

Alternatively, many debtors have contacted “loan modification specialists” who often advertise late at night promising substantial reductions of a mortgage. Behind the lofty promises, these specialists often work in two ways. The first is a person who will basically negotiate with your lender on your behalf. Their goal is to try and get you the best loan modification possible. These “specialists” are usually people who have very good connections with the lenders and leverage their knowledge of the industry to get you to fill out the proper forms and get the best deal they can. These “specialists” need not be attorneys. The second type of “specialist” is a person who will go through your loan documents looking for errors. When a debtor borrows money for a mortgage, there is a substantial amount of paperwork involved which requires many levels of accurate and truthful disclosures. During the past 8 years, there have been several lenders who were less than experienced which resulted in non-compliant mortgages. Any mistakes present due to the need for quick mortgages give these “specialist” a bargaining chip to force the lender into a better deal on the debtor’s mortgage. Rumors are that certain mistakes can result in hundreds of thousands of dollars of reduction in home loans. These specialists usually want money upfront and the debtor should expect that money to be non-refundable regardless of the outcome. Since the money would basically be non-refundable, the debtor should be very careful as to who they select as their specialist. Luckily for the debtor, if these specialists do not succeed, bankruptcy is still an option for them.

Generally speaking loan modifications and bankruptcy are like oil and water. The two concepts do not work well together. If a debtor is in the middle of loan modification then any subsequent bankruptcy filing will put a stop to the process until the bankruptcy is finished. Also, if a debtor is in bankruptcy, the bankruptcy court must approve any loan modifications.

A loan modification and a bankruptcy can co-exist but it requires a lot of extra paperwork and many more hoops to jump through. It is better for a debtor to actually finish one before starting another. Technically speaking, if a debtor does a loan modification and then immediately files for bankruptcy, then the debtor’s transaction may fall into the presumption of abuse. The presumption of abuse is important because if the debtor pulled out money or paid down some balance then the debtor may have to return the money or reverse the transaction. However, most lenders will not cry foul unless the debtor intends to renege on the new deal.

If you have a question regarding Bankruptcy please contact us at 1-800-941-6730 or visit www.bkanswers.com and we can connect you with one of our experienced Bankruptcy Attorneys. After you have spoken with one of our bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down, stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your needs.