Phoenix Bankruptcy Law News

September 2010 Archives

Obama Makes Small Business Bill A Law

Perhaps it's a good time to start that small business that you've always dreamed of. On Monday, President Barack Obama signed a $30 billion small business lending bill that will give additional tax breaks to small companies.

Reuters reports that this means people who are self-employed will be able to deduct the cost of health insurance for themselves and their family off of their taxes. Some long-term investments in a company will be subject to zero capital gains taxes and small businesses that buy new equipment will immediately be able to write off their first $500,000 of that investment. The new law also contains provisions that make it easier for small businesses owners to get loans.

Arizona Ranks 11th Among States With Most Bankruptcies

Bankruptcy rates are higher in Arizona than most other U.S states. According to the Phoenix Business Journal, the Grand Canyon State had 6.17 bankruptcy filings per 1,000 persons in the year ending June 30. That ranks Arizona as number 11 when it comes to the states with the most bankruptcy filings. Nevada had the highest rate of bankruptcy filings per capita with 11.74 bankruptcies per 1,000 people

Learn About Debt and Finances For Free

If you're struggling with debt or simply need to get a better hold on your finances, it might be a good idea to check out Financial Education, a free workshop that is meant for people who wish to learn how to better manage their finances. The Prescott Daily Courier reports that Financial Education consists of a four-part series of classes that is to be taught each Tuesday in the month of October. Topics in the financial management class focus on savings, debt reduction and asset building.

How to Improve Your Credit Score

In such a poor economy, it's easy to let your credit score dwindle away. However, Phoenix bankruptcy attorneys say that a good credit score is more important now than ever before. This is because credit scoring plays a large role in the loan approval process and is pivotal in getting a home loan.

In Arizona, there are many people who are struggling to maintain a decent credit score. This might not be so difficult to do, as ABC News recently reported on five easy ways to rebuild credit.

House Considers HR 3421 - Medical Debt Relief Act

According to The Hill, about 41 percent of working-age Americans owed medical debt  in 2007. This is up from 34 percent of the working class owing medical debt just two years earlier. Most individuals rarely take on medical debt voluntarily, but credit reporting agencies will still put medical debt on a consumer's credit report. This could have drastic consequences for the consumer, including difficulties with buying a house or getting a loan.

What Types of Property Are Exempt in Chapter 7 Bankruptcy?

When filing for Chapter 7 bankruptcy, the debtor must hand over certain property to a bankruptcy trustee, who then converts all that property into cash so that certain debts can be paid off. Through this liquidation proceeding, the trustee will distribute the funds to the various creditors.

Yet many people may wonder what types of property the debtor will have to give up. There are property exemptions through the state of Arizona and under federal law, where the debtor is usually able to keep certain types of property. FindLaw states that some examples of exempt property include motor vehicles, certain household appliances, pensions, public benefits, and tools of the debtor's trade or profession. The state of Arizona also has property exemptions for homestead property valued up to $100,000 and personal property that includes pets, horses, milk cows, certain furniture, and wedding rings.

University of Arizona Ranks as Top School for Entrepreneurs

The Phoenix Business Journal calls the University of Arizona a "hot spot" for entrepreneurs. This is because both the graduate and undergraduate entrepreneurial programs at UA have been ranked among the nation's top entrepreneurial programs in Entrepreneur Magazine and The Princeton Review.

Perhaps this Tucson college really does have a lot to offer in terms of business education. UA's Eller College of Management ranked as the fifth best among graduate entrepreneurial programs. The McGuire Entrepreneurship Program for undergrads at UA ranked 12th.

Young Buck Files For Bankruptcy After Reaching $1 Million in Debt

Even famous rap artists with a large amount of bling may find themselves in debt and may choose bankruptcy as an option for debt relief. The Wall Street Journal reports that rapper Young Buck filed for Chapter 13 bankruptcy on August 19, where the rapper owes his creditors about $1 million.

Unemployment on the Rise in Arizona

The unemployment rate in the Grand Canyon state is slowly increasing, leaving more jobless people struggling to make their financial ends meet. The Phoenix Business Journal reports that Arizona's unemployment rate is now higher than the country's unemployment rate, according the August report from the U.S. Bureau of Labor Statistics.

Chapter 12 Bankruptcy for the Family Farmer

Phoenix bankruptcy attorneys will often recommend Chapter 12 bankruptcy for family farmers and family fishermen dealing with a large amount of debt. The U.S. Bankruptcy Court reports that this type of bankruptcy is tailored to meet the economic realities of family farming and has the intention of eliminating many of the barriers such debtors would face if seeking to reorganize under either Chapter 11 or 13 of the Bankruptcy Code.

Blockbuster Prepares to File For Bankruptcy

Movie renters may have noticed the closure of several Blockbuster stores over the last few years. This trend is expected to continue, where the Dallas-based retailer is expected to close hundreds of their video stores by the end of this year. Some reports say that as many as 1,000 Blockbuster stores could be closing.

Reuters reports that Blockbuster Inc. is preparing to file for Chapter 11 bankruptcy this week, where the movie-lending giant announced earlier this year that the company would be closing nearly 10 percent of its stores.

Phoenix Ranks Poorly in Study of Consumer Credit Scores

As reported in the Phoenix Business Journal, the information services company Experian recently released the rankings of 142 metro areas in the United States based on the average consumer credit score. Unfortunately, the city of Phoenix ranks in the bottom third of this ranking as number 102 out of 142.

The average credit score rating in Phoenix is 732, based on the VantageScore method where customers are ranked on a scale from 501 to 990. The credit score is based on various factors, including such items as how much money customers have in available balances, how often they make payments late, and how they pay off their charges.

Pine Canyon Turns to Bankruptcy to Pay Off Debt

Six entities that are tied to the Pine Canyon luxury housing and golf resort in Flagstaff filed for Chapter 11 bankruptcy last month. The Arizona Daily Sun reports that the bankruptcy case was filed in the U.S. Bankruptcy Court in Phoenix and that the various entities now have the plan to sell property in order to pay off about $25 million in outstanding debt.

City of Phoenix Hit Hard With Foreclosures

Many people in Arizona are now falling behind on their mortgage payments and are struggling to avoid foreclosures. ABC News reports that foreclosures now make up 45 percent of the existing homes in the Phoenix area, according to research done by Arizona State University. Last August, the greater Phoenix area experienced the second highest level of foreclosure home sales activity this year.

What exactly has led to the large increase in foreclosures across Maricopa County? Many experts feel that the unstable job market and poor economy are factors that are making it difficult for homeowners to pay off their mortgage. People who should be eligible to buy a house are also having trouble getting a loan because banks are being more conservative about who they're giving loans to.

Baby Boomer Generation Files the Most Individual Bankruptcy Proceedings

Young adults are often criticized for their irresponsible spending and excess credit card debt, yet it is the baby boomers that file the largest percentage of bankruptcies. According to FOX News, the baby boomer generation (those born between 1946 and 1964) makes up 42 percent of all individuals filing for bankruptcy, as reported by the American Bankruptcy Institute's ABI Journal.

Spark Design Looks to Reorganize Through Chapter 11

The Tempe based company Spark Design LLC recently filed for bankruptcy in Arizona, as reported in the Phoenix Business Journal. Perhaps this can end up being a smart decision for the company in that it will allow the company to reorganize and continue business transactions under the U.S Bankruptcy Code with the bankruptcy court's approval.

The company's Manta profile states that Spark Design was first established in 1997 as a web design and graphic services business. Spark Design has an about 22 employees and brings in an estimated $3,000,000 in annual sales. So what exactly led this Arizona company to go bankrupt?

Is Child Support Dischargeable Through Bankruptcy?

It's true that many different types of debt can be relieved through bankruptcy. However, it's important to realize that bankruptcy usually cannot discharge child support payments. FindLaw states that debt from child support is considered a "priority debt"  among the courts, which means that this type of debt is entitled to be paid off first in a bankruptcy case.

However, parents that are delinquent on child support and owe a great deal of back child support may want to consider filing for bankruptcy for other reasons. By filing for bankruptcy, a person can relieve himself from debt or lower debts. This can allow the non-custodial parents to have more money, which can then go toward paying child support.

AZ Cities Hire Collection Agencies to Collect Unpaid Utility Bills

One way in which people find their debt stack up quickly is by not paying water or utility bills. When this happens, the Arizona Republic reports that many cities surrounding the Phoenix area will not track down the delinquent consumers and will instead hire private collection agencies to recover delinquent bills for water, electricity, gas, sewer, trash and irrigation services.

The cities of Surprise, Peoria, and Mesa are just some Arizona cities that have reportedly turned to private collection efforts so that they can recover money that is owed to them. The private agencies are supposed to have debt expertise when it comes to collecting past-due amounts.

Chapter 11 Bankruptcy: The Rehabilitation Option

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When exploring all of the various bankruptcy options, Chapter 11 of the U.S. Bankruptcy Code often seems attractive to individuals with excessive or complex debts, or to large commercial entities such as corporations.

According to LawBrain, Chapter 11 bankruptcy can sometimes be called rehabilitation bankruptcy, as this option allows a company or firm to reorganize debt and re-emerge debt free. Unlike Chapter 7 bankruptcy, the company does not need to sell off all assets to pay back creditors. A trustee is instead assigned to supervise the assets of the debtor and allow business to continue according to the terms of a court-approved reorganization plan. With Chapter 11 bankruptcy, the debt does not go away, but the restructuring allows changes to the terms of the debt.

Phoenix Ranks in the Top 10 Most Indebted Cities

If you're a Phoenix resident and you're in debt, you're certainly not alone. U.S. News recently ranked Phoenix among the top 10 cities with the most debt.

The capital of the Grand Canyon State actually ranks fourth among the top indebted cities, with Denver, Seattle, and Dallas ranking higher than Phoenix. These cities all have average debt levels of $26,000 or more.

The Basics of Chapter 13 Bankruptcy

If you don't have many assets, your wages are below the median Arizona income, and most of your debts are not secured, then many Phoenix bankruptcy attorneys would say that it's best to file for Chapter 7 bankruptcy. However, when people don't meet the criteria to qualify for Chapter bankruptcy, they'll often turn to Chapter 13 bankruptcy.

With Chapter 13 bankruptcy, the debt does not disappear, but is instead restructured. FindLaw states that a debtor must submit a full or partial repayment plan, which must be approved by the court. With the court approval, a bankruptcy trustee will then collect monthly payments from the debtor and pay the creditors in the way specified in the plan. The repayment plan may sometimes take up to five years to complete.

Arizona Has Highest Rate of Federal Student-Loan Defaults

The Arizona Daily Star reports that the Grand Canyon State has the highest rate of federal-loan defaults, compared to the other 49 U.S. states. The national default rate is sitting at 7 percent, where the Arizona default rate is at 10.9 percent.

The state of Arizona has many students struggling to pay back their student loans in such harsh economic times. 9 out of the 10 Arizona colleges with the highest default rates in the state are private schools. The other one on the top 10 list is a public community college. About 70 percent of the loan borrowers in default attended the University of Phoenix. With the rising costs to attend college and the increasing struggle for college graduates to find a job, we're seeing more and more people default on their student loans.

The Basics of Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common type of bankruptcy, with more than 80 percent of bankruptcy cases being Chapter 7 filings in the Phoenix metro area. But what exactly is Chapter 7 bankruptcy and how does a person qualify for the filing of this type of bankruptcy?

According to FindLaw, Chapter 7 bankruptcy is sometimes known as straight bankruptcy. It's a liquidation proceeding where the debtor turns over all non-exempt property and assets to a trustee, who then converts the assets into cash. The trustee will then distribute the funds to creditors in order of priority described in the U.S. Bankruptcy Code. Creditors will frequently receive only a portion of the money that is owed to them, but the debtor can often walk away from the process debt free with a clean start. The debtor can also usually receive a discharge that releases the debtor from personal liability for certain dischargeable debts.

Phoenix Sees Jump In Bankruptcy Claims In August

Just when we thought that the number of bankruptcy filings was dwindling down in the Valley, the month of August came around and we saw a huge jump in the number of Phoenix-area bankruptcies. The Arizona Republic reported that the number of Phoenix bankruptcies bumped up to 2,865 in August, compared to 2,585 filings for July.

With this increase, economists and Arizona bankruptcy attorneys predict that we'll see more than 30,000 cases of bankruptcy in the Phoenix area for 2010, slightly more than the over 25,000 bankruptcies that were filed for 2009. This year, the poor economy is driving many more people to discharge their debts.