California Bankruptcy Lawyer Blog

Compared to 2005, the number of bankruptcy filings from January to September 2006 was 1/3 less. This is believed to be due to the enactment of The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. In the past year, the new law has made it harder for individuals to have their debts excused and was the biggest U.S. bankruptcy overhaul since 1978. While credit card issuers have championed the law, saying it is a way to prevent bankruptcy filing abuse, critics of the law say that the people who file for bankruptcy protection usually do so not to get rid of their debt, but because they have lost their jobs, gotten divorced, can’t afford to pay their medical fees, or they can’t pay the high interest rates and fees on their debts.

According to data collected from the Administrative Office of the US Courts:
· There were 1.113 million personal and business bankruptcies in the fiscal year ending September 30, down 37.6% from the record 1.783 million the prior year.
· Personal bankruptcies fell 37.9% to 1.085 million.
· Business bankruptcies fell 20.1% to 27,3333.

Because the people who earn more than the median income in their states cannot file under Chapter 7 bankruptcy, they must now file under Chapter 13. Overall, the amount of bankruptcy filings was the lowest since September 1996.

Top 5 States with the highest number of bankruptcy filings in the fiscal year ending September 2006:

California: 85,223
Ohio: 72, 403
Texas: 65,474
New York: 57,686
Illinois: 57,023

Continue reading "Bankruptcy Filings In 2006 Are The Lowest In 10 Years" »

Just a little over one year after the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) went into effect, the number of Chapter 13 Bankruptcy filings has decreased.
For example, According to statistics released by the Administrative Office of the U.S. Courts, Chapter 13 filings fell 19.5 percent to 355,756 in March 2006 from 441,838 in March 2005.

According to the National Foundation of Credit Counseling, however, this does not mean that people are handling their financial affairs better. In fact, there was actually a rush of people who filed for Chapter 7 bankruptcy prior to the implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act because there was a possibility that they would not meet the new requirements for filing for Chapter 7 protection.

Initiatives of the BAPCPA include:

•Implementing the new “means test” to determine whether a debtor is eligible for chapter 7 (liquidation) or must file under chapter 13 (wage-earner repayment plan).
•Supervising random audits and targeted audits to determine whether a chapter 7 debtor’s bankruptcy documents are accurate.
•Certifying entities to provide the credit counseling that an individual must receive before filing bankruptcy.
•Certifying entities to provide the financial education that an individual must receive before discharging debts.
•Conducting enhanced oversight in small business chapter 11 reorganization cases.

Continue reading "According To U.S. Courts' Administration Office, There Are Less Chapter 13 Bankruptcy Filings In 2006" »

In the United States, the number of people filing bankruptcy to erase their debts has decreased since the country revised its bankruptcy laws last year and Congress began mandating an income-based test for measuring a debtor’s ability to repay his or her financial obligations.

Because of this, less people are able to file a Chapter 7 bankruptcy, and debtors who have an income higher than their state’s median and can pay at least $6,000 over a five-year period must file Chapter 13 bankruptcy nd repay some of their debt.

In California, the median for a single earner is $43,107. The median for a family of four is $70,172.

Continue reading "Bankruptcy Filings Decrease One Year After New U.S. Law" »

On October 6, Tower Records was sold to Great American Group for $134.3 million at a bankruptcy auction. Great American Group plans to sell all of Tower’s inventory, and going-out-of-business sales are already taking place at all 89 Tower stores.

Tower Record’s website Tower.com, Pulse! Magazine and its 33rd Street Records, however, are being bought by Norton LLC of San Francisco for $3.8 million.

Tower Records owes $200 million to creditors and in August had filed for bankruptcy for a second time.

Continue reading "Sacramento-Based Tower Records Sold At Bankruptcy Auction To Liquidation Firm Great American Group" »

Silicon Graphics Inc. (SGI) plans to emerge from bankruptcy this month. The Mountain View-based computer business’s reorganization plan was approved by a US bankruptcy court last month.

SGI says it is receiving an $85 million term loan from Morgan Stanley Senior Funding Inc. and a $30 million credit line from General Electric Capital Corp. for its exit financing. SGI says the loan will pay off debtor-in-possession financing and provide working capital for its current operations.

SGI—the company that became famous for its high-powered graphic systems—filed for Chapter 11 protection last May when it reported $664 million in debt and $369 million in assets.

Filing Chapter 11 of the Bankruptcy code lets a bankrupt company reorganize it’s business so it can become profitable. The business continues running but must be supervised by a bankruptcy court.

Continue reading "Bay Area Based-Silicon Graphics Reemergence From Chapter 11 Approved By U.S. Bankruptcy Court" »