Phoenix Bankruptcy Law News

January 2011 Archives

Phoenix Has 4th Highest Foreclosure Rate in Country

Approximately 124,720 properties in the Phoenix metro area were hit with foreclosure last year, which means that one out of every 14 homes in the state fell victim to the foreclosure proceedings. The Phoenix Business Journal reported that these numbers are based on the Year-End Metropolitan Foreclosure Market Report by RealtyTrac. The report ranks 206 markets by the percentage of total housing units hit with foreclosure filings.

Phoenix was ranked as the metro area with the fourth highest foreclosure rate in 2010. It might not be too surprising that Las Vegas had the nation’s highest foreclosure rate last year, followed by the Cape Coral/Fort Myers, Florida area and then the Modesto, California area.

Surprise Mayor Lyn Truitt Declares Bankruptcy

Even politicians will sometimes face financial troubles and have no other option than to file for bankruptcy protection. The Arizona Republic reported that Lyn Truitt, mayor of Surprise, filed for bankruptcy last month after accumulating credit card and other debt.

Court documents show that Mayor Truitt owes more than $77,000 on 10 different credit cards. He also has two homes that he pays mortgage on and says that his most recent financial troubles came about from the downward turn in Arizona's real-estate market and the high medical bills that he was left with after his wife's death.

Phoenix Co Mesa Air Emerges From Chapter 11 Bankruptcy

The Phoenix-based Mesa Air Group and its 11 wholly owned subsidiaries are expected to emerge from Chapter 11 bankruptcy protection in February. According to the Phoenix Business Journal, a U.S Bankruptcy Court judge in the Southern District of New York recently approved of the company’s reorganization plan.

As part of the Chapter 11 reorganization plan, Mesa Air Group will reportedly eliminate more than 100 aircraft leases and financing deals, which totaled about $700 million in capitalized leases and $50 million in debt. The court-approved reorganization plan also states that the code-share agreement between Mesa Air Group and U.S Airways Inc. will be extended.

What to do After Defaulting on Student Loan

It's no secret that the cost of higher education is on the rise. With a higher price tag on college education and a decrease in the number of jobs available for college graduates, many people are having trouble paying off their student loans.

If a student loan enters default, the borrower could be responsible for paying collection fees and commission charged by a debt collection agency. Yet it's important for a borrower to understand his or her rights when it comes to paying off student loans.

The San Francisco Chronicle reports that The Higher Education Act gives student loan borrowers a chance to pay off loans that are in default by setting up a payment plan that is "reasonable and affordable." If the borrower follows the terms of this payment plan by making nine consecutive on-time payments, the student loan will be out of default.

Reducing Credit Card Debt

The San Francisco Chronicle reports that more than 13.5 million Americans are in debt from over- spending during the holiday season. These consumers will likely want to pay off their credit card debt as quickly as possible so that they can avoid permanent damage to their credit report.

How exactly does a consumer go about paying credit card debt in the most efficient way? The Chronicle provides three simple strategies for paying off the holiday debt as quickly as possible.

Anchor Blue Files For Chapter 11 Bankruptcy a Second Time

Phoenicians might want to check out the retail sales at Anchor Blue this month. After 40 years of business, the teen clothing chain will be closing many of its stores due to a Chapter 11 bankruptcy filing. The apparel chain apparently suffered from severe sales declines during the holiday shopping season, perhaps due to competition from other clothing stores like Pacific Sunwear of California, American Eagle Outfitters and Old Navy.

The Phoenix Business Journal reports that 117 Anchor Blue store locations across the country will be going out of business, including 13 stores in the state of Arizona. Not only are the Anchor Blue retail stores offering great deals on all of their merchandise, but the company is also selling its stores' fixtures, such as apparel racks, lights and cabinets.

Ownership Costs Cannot Be Deducted Without Making Car Payment

Lower courts have long disagreed on how to calculate a debtor's disposable income in a bankruptcy case, as there has been some confusion on how standardized methods are specified under the law. NPR reports that a Nevada man named Jason Ransom filed for Chapter 13 bankruptcy in 2006 and claimed a standard of a $471 monthly car payment. However, the credit card company disputed this deduction amount because Ransom owns his vehicle and does not actually make monthly car payments.

Volvo of Tempe Emerges After Powell Volvo Bankruptcy

The Powell Volvo company is now getting a new name and new business owners after emerging from Chapter 11 bankruptcy protection. The Phoenix Business Journal reports that the company is changing its name to Volvo of Tempe and is planning to relocate the business to a spot in the Tempe Autoplex, at 8060 S. Autoplex Loop.

The Volvo dealership, which is currently located at 6500 E. McDowell Road in Scottsdale, was purchased by the Thurston Dealer Group on December 20 for an undisclosed amount of money. The Thurston Dealer Group has already reportedly begun their business by ordering and selling vehicles. More information about the Volvo of Tempe business can be found at their website — http://www.volvooftempe.com.

High Rates of Unemployment Can Lead To More Bankruptcy Filings

The U.S Department of Labor said on Tuesday that the unemployment rate increased in more than two thirds of the country's largest metro areas in the month of November. The cities with the highest rates of unemployment are mostly in California, but one Arizona city did rank in second place on the list of U.S cities with the highest rates of unemployment.

That city was Yuma, which had an unemployment rate of 24.8 percent in November 2010, according to the Associated Press. Other cities in the state of Arizona also have high unemployment rates that are above the national average of 9.3 percent. The Phoenix metro area had an unemployment rate of 10.7 percent in November.

State Takes Temporary Steps to Solve Arizona Budget Crisis

Legislators currently face difficult decisions on how to balance this year’s budget. Tom Franz, CEO of Greater Phoenix Leadership, wrote in the Arizona Republic that the projected structural deficit for 2014 is at least $2 billion, which is about 20 percent of Arizona’s projected general-fund budget. This year, the state faces a shortfall of more than $825 million.

Business Insider: Numerous Cities Face Bankruptcy in 2011

Xinhua News reports that if certain municipalities can't find a way to balance their budget, they'll have to declare bankruptcy in order to resolve their deficit crisis. Based on information from Business Insider, Xinhua states that at least 16 cities in the United States might declare bankruptcy in 2011. Among these cities are New York City and Los Angeles, the two larges cities in the country.

Cities will sometimes declare Chapter 9 bankruptcy so that the municipality is able to reorganize debts. Through Chapter 9 bankruptcy, a municipality is often able to break untenable contracts and rebuild credit through a court-approved reorganization plan. The largest municipal bankruptcy case in U.S history reportedly took place in 1994 in Orange County, California. The county emerged from bankruptcy after about six months and made severe cuts in spending.