Phoenix Bankruptcy Law News

February 2011 Archives

High Student Loan Default Rates at For-Profit Colleges

When choosing a university to attend, people should think carefully before picking a for-profit college when they’re looking to earn a degree or complete a training program. This is because for-profit colleges have a high rate of students defaulting on student loans.

The Tucson Citizen reports that the three-year default rate on student loans at for-profit colleges is at 25 percent. This is more than twice the default rate at public colleges, which has an 11 percent default rate, and three times as high as the private non-profit default rate of eight percent. University of Phoenix students reportedly have the largest default rate on student loans.

Why the Recession Isn't Over in Arizona

Economists declared that the Great Recession ended last year, but the state of Arizona is still having trouble making an economic recovery in 2011. The AZ Journal reports that there are several tough economic challenges that residents of the state will be facing this year. These challenges may include the shrinking credit available to individuals and businesses, housing market problems, unemployment, expiring federal stimulus programs, rising health care costs and uncertainty of business taxes.

"We expect Arizona's economy to improve modestly as we move into 2011," University of Arizona Economic and Business Research Center Director Marshall Vest said in AZ Journal. "Population and employment will both grow at less than two percent annual rates."

Borders Will Close Seven Phoenix Stores

ABC News reports that America's second largest chain of bookstores is closing one third of its stores due to bankruptcy. The chain, Borders Group Inc., currently has 11 stores in the Phoenix metro area, but the company will soon shrink this number with seven regional bookstores set to close and one additional store set to close in Tucson.

The Chapter 11 bankruptcy filing by Borders comes after declaring assets of $1.28 billion and liabilities of $1.29 billion. But how exactly did the bookstore chain accumulate so much debt?

Why High School Students Should Avoid Working Long Hours

High school students may want to think twice before they take on too many hours at a part-time job. USA Today reports that a study published in the journal Child Development found that working more than 20 hours a week in high school is associated with decreased school engagement and problematic behaviors.

So while many students work more than 20 hours per week in high school to save for college and avoid student loan debt, research reveals that such students will have lower expectations for educational attainment, lower school engagement, higher levels of substance abuse, and other “problem behavior.” The study in Child Development did find that students working long hours at a job often have a slightly higher GPA than students without jobs, but this is most likely because working students will take easier classes and a lighter course load.

Round Table Pizza Files For Chapter 11 Bankruptcy Protection

If it's a large pizza that is able to cheer you up during such tough economic times, then you might have to choose another simple pleasure to draw in the good vibes. The Fresno Business Journal reports that Round Table Pizza will soon be filing for Chapter 11 bankruptcy protection and that an undisclosed number of company-owned pizza locations will be closing their doors.

Round Table Pizza reportedly owns 140 stores and numerous franchise locations, most of which are in California. But the pizza chain also has Arizona locations in Phoenix and in Yuma, which also could be impacted by the bankruptcy filing. The company says that they plan to close their unprofitable stores and renegotiate leases on marginal stores over the next several months.

Foreclosure Activity Increases Significantly in Phoenix

High levels of economic stress are flying through the Grand Canyon State, as rates of foreclosure in the Phoenix metro area significantly increased in the month of January. The Arizona Republic reports that an Arizona State University study indicates that there were 3,620 foreclosure transactions of single-family homes last month, compared to only 2,440 transactions that took place in December 2010.

The sudden spike in foreclosure activity is likely due to the lifting of temporary moratoriums, which were instituted by mortgage lenders late last year while problems in the way banks had been processing foreclosure paperwork were being investigated.

Receiving In-State Tuition For Veterans Could Get Easier With HB2410

The House Committee on Military Affairs and Public Safety unanimously endorsed HB 2410 last week, a bill that would give in-state college tuition to honorably discharged veterans no matter how short of time the veteran has resided in the state of Arizona. As stated through The East Valley Tribune, such a law could provide veterans with a faster transition to civilian life if they are immediately able to receive in-state tuition at public universities without having to wait a year for the university's current residency requirement.

HB 2410 can also give a boost to Arizona's economy because if the proposed idea passed through the legislature, veterans would be more attracted to the Grand Canyon State and would spend their money that they earn through the GI Bill in the state.

Who's Checking Their Credit Score and Who Isn't?

According to Business Insider, a survey conducted by Credit.com indicates that only half of Americans checked their credit report during the past year. Considering the fact that everybody in the United States can check their credit report for free annually under the Fair Credit Reporting Act, this percentage of just 50 percent is not considered very high.

About 22 percent of the people surveyed said that they've never checked their credit before and 27 percent of respondents said that it has been more than a year since they've checked up on their credit. Which people are doing the responsible thing by ensuring that they get access to a free copy of their credit report?

Chapter 11 Bankruptcy Filing Includes Arizona Biltmore Property

The new owners of one of the oldest and most iconic resorts in Phoenix are filing for Chapter 11 bankruptcy protection in order to get a fresh financial start with the new ownership. The Arizona Republic reports that the now bankrupt Arizona Biltmore, located among the golf courses on Missouri Avenue, will continue to run its operations during the process of the business reorganization.

Investors of CNL-AB LLC assumed ownership of the Arizona Biltmore and seven other resort properties at a foreclosure auction last month. But along with the eight vacation resorts, CNL-AB also assumed $1.525 billion of debt. Other resorts included in the CNL-AB bankruptcy filing include La Quinta Resort and Club in California; Grand Wailea Resort Hotel and Spa in Hawaii; Doral Golf Resort and Spa in Miami; and Claremont Resort and Spa in Berkeley, California.

Top Scottsdale Restaurateurs in Debt From Recession

Many different types of small businesses have failed during the latest recession, including some local restaurants in the Phoenix metro area. The Arizona Republic recently reported on three highly successful restaurant operators who struggled with debt and legal troubles because of the weak economy.

Peter Kasperski reportedly had to close his downtown Scottsdale restaurant Digestif after he was sued by American National Bank over repayment of a $250,000 loan. Another Scottsdale restaurant owner, Robert McGrath, had to file for Chapter 7 bankruptcy protection in Maricopa county after he was left with $1 million of debt from a failed business.

Hotel Occupancy Increases in Arizona, Sign of Economic Growth

The year 2011 shows many signs of economic growth thus far in the state of Arizona, including the fact that occupancy rates are on the rise in hotels and motels. The Phoenix Business Journal discusses a report by Smith Travel Research, which indicates that there was a 7.2 percent jump in hotel occupancy rates in the Phoenix metro area in 2010 compared to that of 2009. Hotels in Arizona also increased their revenues in 2010 by 2.3 percent.

Economists say that even the slight 2.3 percent increase in revenue is significant considering the fact that hotel owners continually decided to cut their rates last year in order to attract visitors. The average price for an Arizona hotel room last year was at $92.80 per night compared to the price of $95.86 per night in 2009. Even a slight increase in the hotel industry's revenue provides signs that the local economy is improving.