Phoenix Bankruptcy Law News

November 2010 Archives

Number Of Credit Card Delinquencies Decline

The number of consumers that fall behind on credit card payments by at least 90 days fell by 9.8 percent during the third quarter of this year, according to the credit-reporting group TransUnion. The Wall Street Journal reported that TransUnion's data shows that the credit card delinquency rate was only at .83 percent over the summer, which is a 24.6 percent decline from the credit card delinquency rate from the same period last year.

Can a Tenant Still be Evicted After Filing for Bankruptcy?

A tenant in Arizona used to easily be able to stop an eviction by filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy. FindLaw states that this is because a bankruptcy filing would put an "automatic stay" on all creditors, including landlords.

However, the Bankruptcy Abuse Prevention and Consumer Protection Act (the new bankruptcy law that went into effect in 2005) changed the law so that it's now easier for landlords to evict tenants that are filing for bankruptcy or who are in the midst of the bankruptcy process. If a tenant has already filed for bankruptcy before the landlord issues the termination notice, an automatic stay will still be issued. With an automatic stay, the landlord cannot begin the eviction process.

Debit Cards Become Ideal Option For Consumers

Most consumers are familiar with the phrase, "Would you like to pay with credit or debit?" But what option do most consumers choose when making a purchase?

USA Today reports that the payment volume for debit cards exceeded that of credit cards for the first time in 2009 and the trend is expected to continue this year. A survey conducted by the National Foundation for Credit Counseling also indicates that 70 percent of consumers will use a debit card or cash for this year's holiday expenses. About 10 percent of consumers surveyed said that they would pay for holiday expenses with credit cards when the bill arrives and nine percent of consumers said that they would pay for the expenses with credit cards over time.

Owner Of Profitness Gym In Tucson Files For Bankruptcy

Profitness Arizona was a gym located on the East Side of Tucson, but the fitness center suddenly closed last March after five years of doing business in the area. The Arizona Daily Star reported that the gym owner Heidi Kolb filed for Chapter 7 bankruptcy, but that a group of creditors banded together to protest the bankruptcy filing.

The creditors allege that the gym's failure was intentional and that Heidi Kolb still owes Profitness instructors and employees a great deal of money. With a Chapter 7 bankruptcy filing, the money that Heidi Kolb owes to creditors could be discharged by the bankruptcy courts.

Large Number Of Phoenix Travelers Sign Of Recovering Economy

The East Valley Tribune reports that 150,000 people will be traveling through Phoenix Sky Harbor International Airport on Wednesday and Sunday of this holiday weekend. This is reportedly a 30 percent increase from the number of Thanksgiving holiday travelers at this time last year.

Perhaps more Phoenix travelers is a sign that the economy is starting to pick up and recover from the recession, as more people now have the money to purchase airline tickets. Even with the protests surrounding the new TSA procedures, it looks like people across the state of Arizona are still choosing to travel on commercial flights.

Unlawful Debt Collection Tactics

How far will debt collectors go to get your money? Bloomberg Businessweek reported last month that the debt collection agency Unicredit America Inc. went as far as to hold fake hearings in a room decorated to look like a courtroom so that they could collect money from unsuspecting consumers.

The debt collection company, located in Pennsylvania, is now facing a civil lawsuit by the PA attorney general's Bureau of Consumer Protection. The state of Pennsylvania is asking courts to immediately freeze the company's assets and stop holding hearings. The Unicredit Debt Resolution Center allegedly summoned people in an Erie office that employees called a "courtroom" where a person dressed in black would sit in a raised area and act as a judge.

Unemployment Rate In Arizona Drops To 9.5 Percent

Arizona's unemployment rate for October 2010 was at 9.5 percent, which is down from September's 9.7 percent unemployment rate. According to the Arizona Republic, the state announced the largest job growth for any October since 2004. This could be a sign that unemployment will continue to decline.

At this point, it's still difficult to tell how many new jobs are permanent and how many are seasonal. A great number of the state's new jobs are reportedly in the construction industry with 5,100 new construction jobs added in October. Recently, there were also many seasonal and permanent retail jobs brought to the state. Walmart, which is the state's largest private employer, opened up stores in Sierra Vista and Flagstaff this month. So over 500 new jobs will be added to the state for the month of November.

City In Michigan Could Be Declaring Bankruptcy

It's not only individual consumers and businesses that file for bankruptcy protection, but municipalities can also declare bankruptcy if the city is in a great deal of debt. Chapter 9 bankruptcy allows a municipality to come back from financial trouble and rebuild credit; however it's rare for this type of bankruptcy to be filed. As we reported in an earlier blog post, there have only been 600 bankruptcy cases that have been filed under Chapter 9 since 1934.

Owners of Westin La Paloma Resort & Spa File For Bankruptcy

According to the Arizona Daily Star, Transwest Resort Properties Inc. has struggled to make their mortgage payments on two of their resorts — The Westin La Paloma Resort & Spa in Tucson and The Westin Hilton Head in South Carolina. Last Wednesday, the company filed for Chapter 11 bankruptcy protection due to the threat of foreclosure.

As stated through FindLaw, the filing of any type of bankruptcy will automatically stay a foreclosure proceeding. Many companies or individuals to choose to file for bankruptcy in order to delay the process of foreclosure. In the case of Transwest Resort Properties, the company was reportedly more than 90 days delinquent on loans. The total mortgage-loan amount on the properties was $240.5 million.

How SB 1070 is Affecting Arizona Economy

Arizona Governor Jan Brewer signed the state’s controversial immigration bill into a law last April, but the Huffington Post now reports that the new law could have some major economic consequences. The law that makes it a crime to be an illegal immigrant in Arizona has reportedly cost the state $141 million in lost meeting and convention business this year.

The Black Friday Forecast

Reuters reports that as many as 138 million Americans could be shopping on this year’s Black Friday and the weekend after, according to predictions by the National Retail Federation. This is about 4 million more people than the shoppers of last year’s three day weekend.

This year Black Friday falls on November 26. The day after Thanksgiving has become a key date for retailers, with sales to start the holiday shopping season. The Black Friday forecast for 2010 is a slightly lower increase than the change from 2008 to 2009, where NRF predicted a 6 million shopper increase between the two years.

Real Housewife Sonja Morgan Files for Chapter 11 Bankruptcy

A castmember of Real Housewives of New York filed for Chapter 11 bankruptcy protection earlier this week and listed $19.8 million of debt in court papers. E! Online reports that the housewife Sonja Morgan filed for bankruptcy protection in Manhattan and is looking to reorganize her debts through a repayment plan.

How exactly did the television personality get herself into almost $20 million debt? Sonja Morgan blames her money woes on a bitter divorce from her husband John Adams Morgan. She also reportedly lost a $7 million judgment when her movie production company, Sonja Productions, was sued by Hannibal Pictures, Inc.

Chapter 7 Bankruptcy: Can I keep the Car?

With Chapter 7 bankruptcy, the debtor will most likely have to turn over a great deal of property to a court-appointed trustee in order to pay money to creditors. Many debtors often wonder if they will be able to keep their car after filing for bankruptcy.

According to FindLaw, motor vehicles are considered exempt property up to a certain value. So while debtors may have to give up family heirlooms, cash, or other valuable items, many people filing for bankruptcy are able to keep the car. Arizona Revised Statute § 33-1125 states that the bankruptcy petitioner is allowed to keep one motor vehicle with Chapter 7 bankruptcy as long as it is not in excess of a fair market value of $5,000. If the debtor is physically disabled, the debtor can keep a car that has a value of up to $10,000.

Fannie Mae Mortgage Help Center Comes to Phoenix

If you’re struggling to make your mortgage payments, you’re certainly not alone in the state of Arizona. The Tuscon Sentinel reported that the Grand Canyon state had the nation’s third-highest rate of foreclosures in the month of August, with 1 in every 165 units becoming bank owned. Yet it looks like there are some new resources in the area that are helping homeowners avoid foreclosure.

What is Credit Counseling in Bankruptcy Cases?

Before filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy in Arizona, the individual debtor is required to attend a course on financial management. FindLaw KnowledgeBase states that these finance classes take about an hour and are very simple. Upon completion of the first financial management class, the debtor is usually eligible to meet with at Trustee after the bankruptcy petition is filed.

There is also a second class on bankruptcy that must be completed, which reportedly takes just a little bit longer than an hour. The second class, which is supposed to be a form of credit counseling, must be completed after meeting with the Trustee and before the judge grants debt discharge in a case. The purpose of the financial management and credit counseling courses is to teach the debtor ways to better plan financially so that bankruptcy does not have to be declared again in the future.

Lacks Furniture Filing For Bankruptcy Protection

The Texas furniture company, Lack’s Home Furnishings, announced earlier this week that the company will be filing for Chapter 11 bankruptcy and will be closing all 36 store locations. The Austin American-Statesman reported that the company has stated that the bankruptcy filing is necessary because lenders are no longer providing the 73-year-old company with funding.

Credit Card Lenders See Lower Delinquency Rates

One of the top reasons why people declare bankruptcy is because of credit card debt. However, Reuters now reports that major credit card companies are reporting lower delinquency rates, which could be a sign of a growing economy.

Bank of America Corp, American Express Co, Discover Financial Services, and Capital One Financial Corp all said that late payments on credit cards fell in the month of October and that October’s delinquency rate was at the lowest level of this year. Consumers also typically have more difficulties making their credit card payments in the second half of each year, because the consumers stop using tax refunds to pay down their debt and start shopping for the holidays.

Why Arizona Has the Highest Rate of Student Loan Defaults

The College Times reported that seven percent of U.S college students defaulted on student loans in 2008 and that 10.8 percent of Arizona college students defaulted on student loans in that same year. These numbers indicate that the Grand Canyon state is leading the nation in student loan default rates.

Why does the state of Arizona have such a high student loan default rate? The U.S Department of Education stated in a press release that students attending for-profit schools are the most likely to default. The University of Phoenix accounts for a large portion of the state’s loan defaults, where 12.9 percent of students at the university reportedly default on their loans. Another reason for Arizona’s high student loan default rate might be due to the fact that the state has seen steep tuition hikes for undergraduate students. Last year, tuition increased by 10 to 20 percent for people attending Arizona colleges.

More Children Co-Sign For Their Parents

Young adults will often receive help from their parents when they’re trying to pay rent on a house or if they’re trying to lease a vehicle. But now it looks like the roles are beginning to reverse and more and more adult children are having to assist with their parents expenses.

ABC News reports that the number of adult children (defined as people ages 20 to 29) that helped their parents with a car lease rose by more than 30 percent in the last two years. The number of debtors between the ages of 18 and 44 decreased last year compared to that of 2008, while the number of debtors that are older than 45 increased slightly from 2008. Most bankruptcy debtors last year were between the ages of 35 and 54.

Phoenix Among the Top 10 Cities With Highest Foreclosure Rate

The Street reports that the states of California, Florida, Nevada, and Arizona had the highest rates of foreclosure last quarter, where 19 of the 20 major U.S cities with the highest rates of foreclosure were located in these states. The large amount of foreclosures are partly due to high rates of unemployment and the large amount of toxic loans that were distributed.

Most People Would Pay Off Debt With Lottery Winnings

Some people might have dreams of buying a house or a fancy car if they were ever to win the lottery. Other people would choose to save the money or invest it. However, Consumer Affairs reports that the Consumer Financial Outlook study shows that most people would pay off their debt after winning the lottery before doing anything else.

Perhaps the most interesting thing about the results of the study is that paying off debt was the top choice of what to do with lottery earnings among the survey respondents, regardless of the respondent’s income level. The study states that one third of people would pay off debt with lottery winnings. The next highest response to what people would do is buy a house, which was the most popular option for 25 percent of the survey respondents. Fifteen percent of respondents said that they would use the money to help their family and friends, while another 15 percent said that they would save or invest the money.

The Factors that Affect Your Credit Score

A credit score is essentially a number that summarizes your credit history and ranks your credit worthiness. Credit scores in the United States range from 300 to 850, with 723 being the median score in the FICO credit scoring system.

What factors determine a person’s credit score? FindLaw states that payment history and the amount of debt a person has are the two main factors that impact a credit score. The credit score will improve if you consistently pay your bills ontime and if you have a good debt to credit limit ratio.

Debt Collectors Turn To Social Media Tools as Resource

Debt collectors used to track down consumers that were delinquent on their bills by using the Yellow Pages or by contacting family members and neighbors. Now, it looks like debt collectors have a new way of tracking down debtors — the internet.

Aomid News reports that collection agencies all across the country are now using social media websites, such as Facebook, MySpace, Twitter and LinkedIn in their collection efforts. Many online users will post information on these social media websites that reveals where they live, how they can be contacted, and what type of purchases they’re making. Hence, it would be a good idea for those that are delinquent on bills to edit their privacy settings on these websites, and be careful of who they add as “friends” on these websites.

The Decline in Chapter 11 Bankruptcies

Even during times when there’s such a tough business climate, the U.S has actually seen a decline in Chapter 11 bankruptcies. The Wall Street Journal reports that the number of businesses filing for bankruptcy declined by nearly 6% through the first three-quarters of 2010, compared to the same time period last year.

Through the first nine months of this year, 43,016 businesses in the U.S have reportedly filed for bankruptcy protection. During the third quarter of 2010, there were only 13,957 U.S businesses that filed for bankruptcy, which was down by nearly 8 percent from the same period in 2009.

U.S Sees Rise in Employment During October

Economists across the country are now optimistic when it comes to economic growth, partly because of the employment surge that took place last month. Reuters reports that private companies hired workers as the fastest pace since April last month and that nonfarm payrolls rose by 151,000 in October.

According to the U.S Department of Labor, private hiring rose by 159,000, but the government also cut 8,000 jobs last month. Private payrolls are also up by 1.1 million since last December, which is a sign that there's been solid job growth this year.

Phoenix Sees Decline In Bankruptcy Rate

While many residents of the Valley continue to struggle with debt, it looks like people in the Phoenix area are starting to get a better hold on their finances. The Arizona Republic reports that the Phoenix metro area logged 2,658 bankruptcy filings in the month of October, which is down from the 2,819 bankruptcy filings that were filed in the area during September. Across the state of Arizona, the number of October bankruptcy filings was also down, where the state saw 3,557 bankruptcy filings in October. This was a slight decrease from the 3,766 Arizona bankruptcy filings in September.

Debts That Cannot Be Discharged With Chapter 7 Bankruptcy

With help from a Phoenix bankruptcy attorney, the debtor can usually discharge most debts through Chapter 7 bankruptcy.  However, there are certain types of debts that cannot be eliminated through this type of bankruptcy. FindLaw states that debt from child support, spousal maintenance, government imposed fines, federal or state taxes, and court fees are all types of debts that cannot be discharged through Chapter 7 bankruptcy. In addition, most student loans cannot be discharged through bankruptcy, unless the debtor can prove that repayment of the student loans would cause the debtor and his or her dependents undue hardship.

Learn About Bankruptcy Through Reality Television Show "Downsized"

A new reality television series on WE TV called "Downsized" takes place in the Phoenix-area and focuses on a family that is struggling with debt and money woes. The Arizona Republic reported that the reality series premiered on Sunday and was shot from mid-May to mid-July with just a dozen crew members.

The series focuses on the Bruce family, which consists of parents Todd and Laura Bruce and their seven children that are ages 10-17. The couple married five years ago and their kids are all from prior marriages. In each episode, viewers will see how this large family is struggling financially and what they're doing to get by. The series has eight weekly hour-long episodes.

FTC Looking To Change Policy On Collecting From Deceased Debtors

There are currently laws in place that prohibit debt collectors from seeking payments from the family members of consumers that have recently died. However, KBOI News reports that a proposed FTC policy could allow debt collectors to use more aggressive tactics when it comes to taking money from the families of deceased debtors.

Language of the Fair Debt Collection Practices Act does not allow the debt collector to discuss a person's debt with a third party, including family members or friends of the debtor. However, lawyers with the National Consumer Law Center say that a proposed "statement of enforcement policy" can undermine this section of the Fair Debt Collection Practices Act and create loopholes for creditors that would allow more contact between the debt collector and family members of the deceased debtors.

General Growth Properties Set to Exit Chapter 11 Bankruptcy

General Growth Properties, which owns the Tucson and Park Place malls in Tucson, is now looking to exit Chapter 11 bankruptcy protection after coming up with a plan; and restructure $15 million in debt. Inside Tucson Business reports that a bankruptcy judge has already approved the bankruptcy exit strategy for the mall owner, which includes a plan to have the company split itself.

Smartphone Apps That Can Help With Debt Management

In such tough economic times, consumers and small businesses are often finding themselves in debt. People often wonder how they can better manage their debt or finances and might not realize that new technology can help with debt management. Smartphones offer numerous apps that can assist with tracking debt and debt relief. Here are just a few useful debt management apps on the market that the National Debt Relief Program lists.

Heidi Montag and Spencer Pratt Consider Bankruptcy Options

Celebrities will often file for bankruptcy when they don't have a good grasp on their finances. New York Daily News reports that Heidi Montag and Spencer Pratt, stars of The Hills on MTV, could be filing for bankruptcy after wasting $10 million on luxuries.

The couple apparently spent a great deal of money on a home Malibu, fancy cars, plastic surgeries, and private jets. However, they didn't expect their reality television series to get canceled. Now, the couple claims that they're just living off of unemployment checks.

Rising Tuition Costs Can Leave More Students in Debt

The Los Angeles Times reports that the non-profit College Board released a study that shows the cost of college tuition at both public universities and private universities is increasing. College tuition at public campuses increased by an average of 7.9 percent, while the tuition costs at private schools increased by about 4.5 percent. Meanwhile, general inflation rose by only 1.2 percent this year, so many more college students and their parents might be struggling to pay for education in such tough economic times.

Devon James Files For Chapter 7 Bankruptcy

The porn star that falsely claimed Tiger Woods was the father of her love child is now $231,124 in debt, according to Peace FM. Devon James made the headlines of media tabloids after claiming that her son Austin was the son of Tiger Woods, however it seems that the mother's fame is slowly fading away along with the money in her bank account.

With a bankruptcy lawyer, Devon James and her husband Nick James reportedly filed for Chapter 7 bankruptcy in Tampa Bay court. The only assets that she and her husband reportedly listed in the bankruptcy filing were $1,800 worth of personal property, $1,200 in household goods and furnishings, $300 in clothes, and $300 in cash on hand. There's no mention that they may have financial interests in the alleged sex tapes between Devon James and Tiger Woods. 

National Enquirer Publisher Files For Chapter 11 Bankruptcy

Many newspapers, tabloids, and other print publications are quickly losing money and choosing to file for bankruptcy in an age where the Internet seems to be replacing readership of print media. Hence, Phoenix bankruptcy attorneys now have more Chapter 11 bankruptcy cases to work on.

The Street reports that American Media Inc., publisher of The National Enquirer, plans to file for Chapter 11 bankruptcy protection in about two weeks. The company plans to exit bankruptcy no more than 60 days after the filing. Yet even with the bankruptcy filing, the company has stated that operations for its publications will continue as usual and that the bankruptcy reorganization plan will not affect its business or its employees.

Arizona Ranked 17th In Nation For Business

Site Selection recently ranked the top 25 states based on business climate and the results are quite surprising for some Phoenix bankruptcy attorneys and economists. The state of Arizona was ranked as having the 17th best business climate, based on performance of the state in Conway Data's New Plant Database and on a survey by corporate site seekers.

U.S. Economy Sees Slight Boost in Third Quarter

The Guardian reports that the country's gross domestic product, or the value of all goods and services produced inside U.S. grew by 2 percent in the period of July through September. The U.S. Commerce Department announced that this small bit of growth is higher than the 1.7 percent increase in GDP growth that occurred during the second quarter of this year.

Fulton Homes File For Chapter 11 Bankruptcy

One of Arizona's largest home builders is looking to file for Chapter 11 bankruptcy, but lending groups are trying to stop the company's bankruptcy plan. Bloomberg reports that Fulton Homes Corp. has a bankruptcy confirmation hearing scheduled for November 8. The banks have already filed papers saying that the company's reorganization plan doesn't comply with the law.

At this point, the lending groups Bank of America NA, JPMorgan Chase Bank NA, and Wells Fargo Bank NA are trying to block Fulton's reorganization plan and have even established a competing reorganization plan in the bankruptcy case. The home building company reportedly owes about $1.2 million in unsecured claims, but has no substantial secured debt.