Phoenix Bankruptcy Law News

April 2012 Archives

Many young people who have graduated recently into an ailing economy have found the weight of their student loans to be crippling. According to recent data from the 2010-11 school year, about 7.5 million undergraduates use Stafford loans to pay for college.

President Obama recently called on Congress to address the issue of rising student loan interest rates. On Friday, the U.S. House approved a $5.9 billion bill to maintain low interest rates for Stafford student loans, USA Today reports. However, the means by which the bill would pay for the extension have proved controversial.

While filing for a Chapter 7 bankruptcy will help you get out from under your debt burden, it will also require that most of your assets be liquidated to pay off creditors. Thanks to bankruptcy exemptions, however, many filers will not have to start from scratch after their filing goes through.

Exemptions protect certain types of property from being liquidated during bankruptcy. Below, we’ve included three of the most important bankruptcy exemptions and the accompanying caps Arizona law places on them.

Social Security is heading towards insolvency at an even faster rate than expected, The Associated Press reports. The trust funds that support Social Security will be completely depleted by 2033, three years earlier than was projected.

The accelerated depletion is largely due to the retirement of Baby Boomers, the struggling economy, and the failure of politicians to fix the retirement and disability programs. Unless Congress acts fast, the government will only be able to pay partial benefits out in the near future.

US Airways has reached an agreement on contract terms with American Airlines’ major labor groups, Bloomberg reports. The agreement places the Tempe-based US Airways one step closer to making a takeover offer for American.

AMR Corporation, American Airlines’ parent company, filed for Chapter 11 bankruptcy protection in Nov. 2011. American’s labor unions have fiercely protested the company’s proposal for 13,000 job cuts. The unions see a merger with US Airways as a way to avoid many of those job cuts.

Last month, Bank of America began offering the pilot “Mortgage to Lease” program to homeowners in danger of foreclosure. So far, the program is only available to 1,000 preselected customers in Arizona, Nevada, and New York, reports.

Under the program, homeowners fearing foreclosure transfer the title of their home to the bank. The bank then forgives the outstanding mortgage debt, and the former homeowner goes on renting the home from the bank for a 3-year lease period.

This week, the Senate is debating whether the government should help rehabilitate the ailing U.S. Postal Service with a short-term cash infusion of $11 billion, The Washington Post reports. The temporary stall would allow lawmakers to delay decisions regarding the closing of post offices and discontinuing Saturday delivery.

The Postal Service has been on the brink of bankruptcy, and asserts that in order to stay afloat it must begin closing thousands of low-revenue post officers and processing centers as part of a plan to become profitable again by 2015. However, lawmakers and the communities they represent are fearful of the prospect of tens of thousands of layoffs.

Filing for a Chapter 7 bankruptcy will help you handle your debt burden, but it can have a lasting effect on your credit score. There are, however, some things you can do to help rehabilitate your credit score post-bankruptcy, according to MSN Money.

Your credit score is important because it’s what lenders look to when determining whether they should extend any type of credit to you, including credit cards, car loans, mortgage or rental agreements, and student loans. A bankruptcy can remain on your credit report for 10 years, but below, we’ve included a few tips to help raise your score.

Arizona is the new capital of foreclosures, breaking Nevada’s 62-month streak at the top, The Associated Press reports. Although the state’s foreclosure rate fell in March, Nevada’s dropped further.

The city of Glendale and a branch of Habitat for Humanity are attempting to turn the rise in foreclosures into a positive by buying and renovating foreclosed homes. The renovated homes will then be sold to people with lower incomes, according to The Associated Press.

On Tuesday, the federal Consumer Financial Protection Bureau proposed new mortgage lending rules that would offer homeowners more ways to avoid foreclosure and a better system for giving them accurate accounting statements of their mortgage payments, The Associated Press reports.

After the 2008 financial crisis, Congress mandated changes to the current rules governing the mortgage industry. The proposed rules are the result of that mandate.

Former NFL player Warren Sapp recently filed for Chapter 7 bankruptcy in South Florida, The Associated Press reports. According to the filings, Sapp owes more than $6.7 million to creditors and in back child support and alimony payments.

During his 13-year career in the NFL, Sapp played defensive tackle for the Tampa Bay Buccaneers and the Oakland Raiders. He also performed as a contestant on ABC’s “Dancing with the Stars.”

The number of bankruptcy filings in the Metro Phoenix area continued to decline in March, The Arizona Republic reports. The number of bankruptcies filed last month dropped 26 percent from the number of filings in March of last year.

In all of Arizona, bankruptcy filings were down a whopping 28 percent from March 2011. On a year-over-year basis, last month’s decline in filings marks the fourteenth consecutive month in which Arizona bankruptcy filings have been in decline.

The Center for Health Transformation, a health care think tank created by Republican presidential candidate Newt Gingrich, filed for Chapter 7 bankruptcy on Wednesday, The Arizona Republic reports. Gingrich helped found the center in 2003. Over the years, it focused on health-related initiatives, like President Obama's health care reforms and improving health care technology.

In May 2011, Gingrich ended his association with the center to focus on his presidential campaign. His departure was likely a contributing factor in the group's fall.

AFA, a ground beef processor, filed for Chapter 11 bankruptcy on Monday, citing the backlash over the processed beef filler “pink slime” as the main cause, Reuters reports. AFA is one of the largest ground beef processors in the U.S.

In its filing, AFA cited “recent changes in the market” for its ground beef and media coverage of pink slime as contributing factors. The company has secured $56 million in bankruptcy financing to allow it to continue producing its other offerings during the Chapter 11 case.