Monday, October 31, 2011

Are we headed toward a rash of local bankruptcies?

As the federal budget battle rages, some local governments are having their own fiscal problems.

Read the article at the Christian Science Monitor

A look at the 10 biggest US corporate bankruptcies, after MF Global joined the list on Monday

Securities firm MF Global Holdings Ltd. filed for bankruptcy protection Monday after the company posted a big quarterly loss and was downgraded by credit rating agencies. Investors were concerned about its holdings of European sovereign debt. It appears to be the first big U.S. casualty of the European debt crisis.

MF Global is the eight-largest U.S. corporate bankruptcy, based on the assets listed in its court filings. Here’s an updated list of the nation’s 10 biggest bankruptcies.

Click here for the list from the Washington Post

Bankruptcy Myths Debunked

If you are considering bankruptcy, don't make these mistakes. In these tough economic times, people at all levels of the economic ladder are considering bankruptcy.

Bankruptcy takes planning for two reasons: (1) you want to emerge from bankruptcy in the most beneficial financial position; and (2) you want to make sure you actually complete the bankruptcy process. We are debunking some common bankruptcy myths so you can ponder when and whether you should file for bankruptcy.

Read the rest of the article at New Tampa Patch

Beacon Power bankrupt; had U.S. backing like Solyndra

Beacon Power Corp filed for bankruptcy on Sunday, just a year after the energy storage company received a $43 million loan guarantee from a controversial Department of Energy program.

The bankruptcy comes about two months after Solyndra -- a solar panel maker with a $535 million loan guarantee -- also filed for Chapter 11, creating a political embarrassment for the administration of President Barack Obama, which has championed the loans as a way to create "green energy" jobs.

Read the rest of the article at Reuters

Tuesday, October 25, 2011

Seeking home loan help, beware of scam artists

Con artists see opportunity in this crisis. Realtor Rebecca van Dahlen of Coldwell Banker Northern California's Morgan Hill office has seen many fraud victims and is outraged.

"Homeowners are driven to these scams because it's so difficult to get through the loan-modification process. It's more difficult than dealing with the DMV, it's more difficult is dealing with an insurance company," van Dahlen said. "I can't tell you how many homeowners I run into who have been scammed and it's just too late for them."

When homeowners apply for a loan modification, they start a frustrating, Byzantine process, van Dahlen told me: Lenders require homeowners to complete and return many complicated forms; lenders often lose submitted paperwork, then require homeowners to resend it. Information reported by one lender telephone representative frequently contradicts information given by the next representative with whom a homeowner speaks. Loan-modification applications are frequently rejected for vague reasons, homeowners are often told to apply for different programs and they start the cycle all over again. Meanwhile, their financial difficulties worsen.

Van Dahlen recounted one couple who had not missed a payment on their mortgage, but who was at risk due to reduced income. They applied for a loan modification but their lender declined stating that the couple had missed a deadline for returning paperwork. It was paperwork that they had submitted. When this frustrated, worried couple received a slick, official-looking brochure - it even sported the Housing and Urban Development (HUD) logo - in the mail from a company promising to help them through the loan-modification process, they were prime targets.

The company burnished its credibility by "waiving" any fees for their services and sending them lots of legitimate-looking forms to sign. The loan-modification service agreed to shepherd van Dahlen's clients through the loan-modification process. It filed paperwork with the couple's lender, and a few weeks later, notified the couple of their new mortgage payment, provided payment coupons, and directed them to send the new payment not to their lender, but to the loan-modification service.

Read the rest of the article at Gilroy Dispatch

Home prices rose in half of major U.S. cities, survey says

Home prices rose in August in half of major U.S. cities measured by a private survey, a sign that prices are stabilizing in some hard-hit portions of the country.

The Standard & Poor's/Case-Shiller index showed Tuesday that prices increased in August from July in 10 of the 20 cities tracked. That marked the fifth straight month that at least half of the cities in the survey showed monthly gains.
The biggest price increases were in Washington, Chicago and Detroit. The greatest declines were in Atlanta and Los Angeles.

Read the rest of the article at USA Today

Obama Promotes Mortgage Plan Where Foreclosures Highest

The Federal Housing Finance Agency said it will eliminate fees and relieve banks of certain risks as part of a plan to aid homeowners. It expands the Home Affordable Refinance Program, which was introduced in 2009 and limited to borrowers whose mortgages were no greater than 125 percent of the value of their homes.

About 11 million borrowers owe more on their mortgages that their homes are worth. To qualify, borrowers must be making on- time payments on current loans owned or guaranteed by Fannie Mae or Freddie Mac.

Nevada had the nation's highest per-household rate of foreclosure filings at one in 44 in the third quarter, followed by California at one in 88 and Arizona at one in 93, according to RealtyTrac Inc., a data seller in Irvine, California. The state also has the nation's highest unemployment rate, at 13.4 percent. The jobless rate was 8.7 percent when Obama won 55 percent of the vote there in 2008.

Read the rest of the article at the San Francisco Chronicle

Bankruptcies Are Down, But the Business Picture Still Isn't Rosy

Corporations in America may be struggling, but they're not filing for bankruptcy. In fact, since hitting a 15-year peak in the second quarter of 2009, filings have dropped an average of 3.2 percent per quarter, according to figures released by the American Bankruptcy Institute.

Sounds like a beacon of light in an otherwise dark and dismal economic landscape, right?

Don't be fooled, says Llloyd Palans, a bankruptcy expert in the New York office of Bryan Cave. "The dilemma that we are in with the downward spiral of business bankruptcies is a result of what I'd call a perfect storm," says Palans. He says the drop—from 16,014 in 2009 to 12,304 in the most recent quarter—is the result of a confluence of conditions never before experienced.

Read the rest of the article at Law.com

‘Bankruptcy Tourism’ Crackdown Shuts 61 Companies in Britain

Insolvency authorities have closed 61 companies set up in Britain to take advantage of the easy-going bankruptcy rules.

The firms were linked to Rainer Von Holst and Ann Von Holst, both German citizens and business advisers in that country. They recommend that companies adopt British status. The Insolvency Service said the pair were offering British companies to German clients ‘when bankruptcy or commercial difficulties threaten’. It is thought that this was a way of transferring the domicile of a troubled German company to Britain and then using British bankruptcy law to go bust.

The technique is known as ‘bankruptcy tourism’. Companies employ this technique to use British law to go bust in a pre-pack insolvency, which means they can shuffle off creditors and then be relaunched free of debt.

Read the rest of the article at LoanSafe

Dodgers' Owner 'Looted' Team of $190 Million, League Claims

Frank McCourt, the Los Angeles Dodgers owner, "looted" the club of about $190 million, lawyers for Major League Baseball contend in a U.S. Bankruptcy Court filing.

The league made the accusation yesterday in a 61-page brief in Wilmington, Delaware, asking a judge to prematurely end the team's exclusive right to formulate a reorganization plan in favor of the league's plan to sell the team. The filing was among a series of documents from MLB and the Dodgers in which they trade allegations about who is responsible for the team's financial troubles.

Read the rest of the article at the San Francisco Chronicle

Wednesday, October 19, 2011

Filing Chapter 7 bankruptcy in Arizona: What happens to a second mortgage/home equity line?

Second Mortgage or HELOC?
As a bankruptcy attorney, one question I get a lot from clients is what happens to their second mortgage or home equity line of credit (HELOC) when they file for Chapter 7 personal bankruptcy? Bankruptcy law generally protects your home, car and certain other assets. But how does that affect a second mortgage? You can't fully discharge it in the bankruptcy if you are keeping your home. The good news is your personal liability on the second mortgage/HELOC is discharged in the bankruptcy. The lender cannot sue you or garnish your paycheck. The bad news is the lender still has a lien. This means they can foreclose on your house after the bankruptcy finishes and is discharged. However, don't panic yet. If there is no equity in your home, or the equity is less than the amount you owe on the first mortgage, foreclosing will not be a viable option for them. As long as your home does not increase a significant amount in value, you should be fine. Many homeowners will sell their homes before home values go back up in a few years. Read more about this in a recent article on Fox News.

Tuesday, October 18, 2011

NC court weighs if foreclosure needs original docs

North Carolina's Supreme Court heard arguments Monday in a case that could decide whether mortgage lenders can foreclose on a home without producing original documents that prove they're owed the money.

The hearing in a state traditionally friendly to banks and home to U.S. industry leader Bank of America comes as paperwork problems have gummed up foreclosures nationwide.

Those problems include missing documents validating a mortgage transaction and unqualified employees "robo-signing" affidavits improperly swearing to the accuracy of overdue mortgage debts. The problem of suspect documents could create legal trouble for homeowners and mortgage lenders for years.

Read the rest of the article at Businessweek

Bank of America Mortgages Remain a Black Hole of Disappointment

Bank of America's mortgage banking business lost money for a second straight quarter, dropping $1.1 billion on legal fees, fines and other "loss-mitigation expenses," the bank said Tuesday.

The bank's mortgage unit, called consumer real estate services, posted $2.82 billion in revenues. In the second quarter, it lost $13.2 billion on revenues of $1.71 billion in the second quarter.

Raymond James analyst Anthony Polini had predicted a "likely return to profitability" for the unit in a report he published earlier this month. Revenues, however, were slightly higher than the $2.75 billion he had projected. Still, they were down significantly from $3.61 billion a year ago as the bank cited various factors including the loss of revenues following the sale of an insurance unit in the second quarter.

Bank of America attributed the mortgage unit's $3.85 billion expense tab to "higher default-related and other loss mitigation expenses, mortgage-related assessments and waivers costs, which include costs related to foreclosure delays and other out-of-pocket costs that the company does not expect to recover, as well as higher litigation expense."

Read the rest of the article at The Street

Massachusetts AG Coakley may sue lenders for foreclosure abuses

Massachusetts Attorney General Martha Coakley said she is preparing to sue some mortgage lenders for foreclosure-related improprieties, including allegations that the companies have threatened homeowners with property seizures and unwarranted fees even after granting them permanent loan modifications.

“To the extent that banks are not meeting their obligations, this conduct is inexcusable and my office will work to hold them accountable,’’ said Coakley, who did not name the lenders she is targeting for litigation.

Read the rest of the article at the Boston Globe

California Foreclosures Return With Vengeance

After dropping to a three-year low in the second quarter of this year, the number of California homeowners being pulled into the foreclosure process snapped back to prior levels over the last three months, a real estate information service reported.

Read the rest of the article at The Street

Brown Signs Bill to Limit California’s Municipal Bankruptcies

Municipal bankruptcies will face new hurdles under a bill signed by California Governor Jerry Brown in the wake of the Vallejo fiscal meltdown and the earlier Orange County debacle.

After the law takes effect in 90 days, municipalities in the most-populous state will have to submit to a neutral review of their finances, or demonstrate a fiscal emergency, before seeking Chapter 9 bankruptcy protection in federal court.

Read the rest of the article at Businessweek

Amid Bankruptcies First Solar Receives DOE Approval For $2.1 Billion In Loans

Despite the high profile bankruptcies of Solyndra and Stirling Energy Systems, Tempe, Arizona-based photovoltaic manufacturer First Solar received $2.1 billion in partial loan guarantees from the U.S. Department of Energy today. The funds will support the construction of the 550-megawatt Desert Sunlight solar farm in Riverside County ($1.46 billion) and the 230-megawatt Antelope Valley Solar Ranch in Los Angeles County ($646 million).

Read the rest of the article at Forbes

Prominent chef declares bankruptcy

David Ruggerio, a prominent chef who rose to fame nearly two decades ago but fell from grace when he pleaded guilty to credit card fraud, is seeking bankruptcy protection now.
Last Friday he filed for Chapter 11 for two Upper West Side restaurants he owns, Bomboloni, an Italian pastry café, and Jalapeno, a Mexican eatery. The two spots are adjacent at 187 and 185 Columbus Ave., respectively, and opened last year.
In September, another business he co-owns, Sushi a Go-Go, located across from Lincoln Center, was seized by the state for failing to pay taxes. He also co-owns Lansky’s Old World Deli on Columbus Avenue north of Jalapeno and Bomboloni.

Read the rest of the article at Crain's New York Business

Ex-Anglo Irish CEO’s House Sold in Bankruptcy for $3.9 Million

The trustee liquidating former Anglo Irish Bank Corp. Chief Executive Officer David K. Drumm’s assets to help pay creditors owed more than $14 million received court approval to sell his waterfront home for $3.9 million.

U.S. Bankruptcy Judge Frank Bailey in Boston authorized the sale of the Cape Cod property in an order dated Oct. 4. It’s being bought by Three Sisters Trust, or its designee, and sold by Chapter 7 Trustee Kathleen Dwyer, according to the order.

The house in Chatham, Massachusetts, was bought for $4.6 million in March 2008, according to documents obtained from the Barnstable County Registry of Deeds. Drumm resigned in December 2008 and the bank was taken over by the government weeks later. He filed for Chapter 7 bankruptcy protection in October 2010, listing debts of $14.2 million and assets of $13.9 million.

Read the rest of the article at Businessweek

Mob Experience at Tropicana files for bankruptcy

These and other big names in the mobster world were back in court in Las Vegas on Monday — but not in a criminal sense.

Rather, their heirs showed up as creditors in the bankruptcy filing of a museum and interactive exhibit built around their legacies at the Tropicana resort, which has its own mob legacy dating to the days before corporations took over Las Vegas.

The Las Vegas Mob Experience, as expected, voluntarily filed for Chapter 11 bankruptcy reorganization Monday. It's in no way connected to what's perceived to be the better-funded Mob Museum opening next year in downtown Las Vegas.

Read the rest of the article at Vegas, Inc.

Alabama County's Effort To Avert Bankruptcy In Peril

State legislators representing Jefferson County, Ala., have balked at backing bills needed to help Alabama's most populous county resolve its fiscal crisis, reopening the possibility it may file what would be the largest municipal bankruptcy in history.

A tentative agreement reached last month between county commissioners and holders of more than $3 billion in sewer debt hinges upon passage of several state laws. Alabama Gov. Robert Bentley said he was willing to call a special session for legislators, but only if there was enough support among local lawmakers for passage.

Read the rest of the article at the Wall Street Journal

Choosing Bankruptcy Over a Bailout?

Harrisburg, Pennsylvania files for bankruptcy: Should all troubled local governments do this instead of taking bailouts/stimulus money?

Read the rest of the article at Fox News

Can Second Lender Foreclose After Bankruptcy?

The HELOC lenders are unlikely to foreclose in the foreseeable future. In order to get paid, the property value must increase substantially because the first mortgage will always have priority. The HELOC lenders would have to foreclose and use the proceeds from the sale to pay off the first mortgage prior to receiving anything. Because there would be nothing left after paying the first mortgage, the junior lenders are not going to foreclose. It is bad business.

Read the rest of the article at Fox News

High court says ATVs not exempt under bankruptcy law - they are "motor vehicles"

Bankrupt Montanans could be at greater risk of losing their all-terrain vehicles to creditors under a Montana Supreme Court opinion issued late last week.
A federal bankruptcy judge posed the question to Montana's high court to determine whether an ATV was a "sporting good" or a "motor vehicle" under Montana law regarding what creditors can seize from debtors in bankruptcy.
It matters because Montana law protects up to $4,500 worth of sporting goods (up to $600 per item) from the reach of creditors. The law also allows debtors to hold on to one motor vehicle worth up to $2,500.

Read the rest of the article at Billings Gazette

UB40 Declares Bankruptcy

British reggae pop stars UB40 have declared bankruptcy. A judge in Birmingham County has ruled that the band's assets can be seized in order to help pay off their debts, which were largely accumulated by their former management company Dep International Ltd., which went into insolvent liquidation back in 2008.

Read the rest of the article at Rolling Stone

Sunday, October 16, 2011

Unfair to use a bankruptcy against someone running for office if you're running against them and filed yourself!

I don't think filing for bankruptcy disqualifies someone from running for political office. We all have ups and downs in our life. Many people who file for bankruptcy aren't filing because they were irresponsible with credit card purchases; they are filing because they lost their job due to no fault of their own (maybe the economy and layoffs), or due to a contentious divorce and child custody battle. I have yet to see a single bankruptcy client who is filing bankruptcy because they are an irresponsible spender (I have a theory that irresponsible spenders simply find someone else to mooch off of, so they don't need to file bankruptcy).

If everyone who ran for office was held to a really high fiscal standard, none of us would qualify. How many of us have been late paying bills, had penalties added on to late bills, or had family help us out paying our bills? Exactly! Maybe .00001% of the population. With everything going on in life, it is virtually impossible to be perfect. If we were, we'd be God.

I do think someone who has filed for bankruptcy who tends to be a big-spender in political office might be a little troublesome, however. Right now in Phoenix there is a close race for Phoenix City Council between two candidates who have both filed for bankruptcy in their past. Liberal Phoenix City Councilwoman Thelda Williams's supporters (who have ties to the current liberal Democrat Mayor Phil Gordon and his reckless spending as Mayor) have made it an issue against her opponent, conservative Eric Frederick. The supporters fail to mention her bankruptcy. Or the fact that Frederick paid his creditors back and only filed bankruptcy due to being in the mortgage business (half my clients come from the mortgage business, sadly enough).

Since Eric is a fiscal conservative who believes in reining in government spending and reducing taxes, I don't have any concerns about his bankruptcy. But Williams' situation is slightly different. She has flip-flopped on the food tax during the campaign. Some may wonder if her lack of fiscal responsibility at home is related to her lack of fiscal responsibility in government.

Read more here

Thursday, October 13, 2011

Mortgage rates rise sharply from historic low

The average interest rate on 30-year fixed mortgages rose sharply this week after falling below 4% for the first time in history.

Freddie Mac said Thursday that the average interest rate on 30-year fixed loans rose to 4.12%. That's up from 3.94% last week, lowest rate ever according to the National Bureau of Economic Research.

Super low rates haven't been enough to lift the housing market, which has struggled with anemic sales and declining home prices.

Read the rest of the article at USA Today

Home foreclosure proceedings on the rise again

California and other Western states see the largest increase in banks' beginning the foreclosure process on homes. After months of a foreclosure slowdown caused by investigations into improper practices, the nation's home-repossession machinery is beginning to move again — particularly in states such as California where courts don't oversee the process.

Read the rest of the article at the Los Angeles Times

Harrisburg, Pa. declares bankruptcy

The capital of Pennsylvania filed for Chapter 9 bankruptcy protection last night, defying a new state law created to prohibit it from doing so. The Harrisburg city council voted 4-3 to take the drastic step, with supporters arguing that the state’s proposed recovery plan was unacceptable, Bloomberg reports. “We’re not incompetent. We’re just not going to let you run us over with the train anymore,” one councilwoman said, the “you” referring to state officials.

Read the rest of the story at Newser

Seven Prospective Corporate Bankruptcies

Ten companies with at least $100 million in assets filed for Chapter 11 bankruptcy last month - the most since April when 17 such companies filed. So far in October five more big companies have filed, including Friendly Ice Cream Corp. and Open Range Communications Inc.

They join a list this year that includes Borders Group Inc. (PINK: BGPIQ), paper manufacturer NewPage Corp., skin-cream maker Graceway Pharmaceuticals and the notorious solar panel manufacturer Solyndra Inc.

In fact, 2011 has been the worst year for corporate bankruptcies since 2009, when the financial crisis touched off by the Lehman Brothers' collapse caused a record number of filings.

"It's getting busier for everyone I know," Jay Goffman, co-head of the Global Restructuring Group at law firm Skadden Arps, Slate, Meagher & Flom, told Reuters. "I think 2012 will be a busy year and 2013 and 2014 will be extraordinarily busy years in restructuring."

With many companies already struggling and experts warning that the U.S. economy is headed for another recession, odds are that the pace of corporate bankruptcies will accelerate.

Read the rest of the article at Money Morning

Bankruptcies Are on the Rise: Could These Companies Be Next?

Several big-name companies are finding themselves in a struggle to survive in the economic downturn, suggesting a wave of bankruptcies akin to one sparked by the Lehman collapse could be expected in the upcoming months.

Reuters reports, "companies in a range of businesses, including hair salons, restaurants, renewable energy, and the paper industry, have tumbled into Chapter 11 in the past few months." The effects of the struggling economy also threaten "companies in industries as diverse as shipping, tourism, media, energy and real estate."

Industry experts say predicting a wave of bankruptcies is "no easy task." The largest threats to already struggling companies are the probability of sovereign debt crisis in the eurozone and a double-dip recession in the U.S.

These events could ultimately induce a string of business failures that some bankruptcy and restructuring experts warn could "rival the one that followed Lehman Brothers."

Read the rest of the article at the Motley Fool

Saturday, October 8, 2011

When might filing Chapter 7 bankruptcy be a bad idea?

I am a bankruptcy attorney in Arizona, and clients frequently come to me hoping to file Chapter 7 bankruptcy to expunge most of their debt. But Chapter 7 isn't for everyone. The alternative is to file Chapter 13, which won't erase most of your debt, but will reorganize it so you can pay off smaller amounts over a period of 3-5 years. Here are some scenarios where Chapter 13 might be a better option:

1) You own nice cars and have paid them all off. A Chapter 7 bankruptcy in Arizona only lets you keep one car with $5,000 or less equity in it (or one each if it is a married couple filing bankruptcy). For example, if you have a new Chevy Tahoe worth $12,000 that is all paid off, it will be seized and divided up among your creditors if you file Chapter 7. The only way to avoid that is either to sell it (and you must sell it for fair market value), take out a title loan on it, or file Chapter 13 bankruptcy.

2) You have a second mortgage on your home. You cannot strip a second mortgage lien from your home in a Chapter 7 bankruptcy, although you can eliminate your personal liability. You can strip both in a Chapter 13 bankruptcy. If the bulk of your debt is in your mortgages, and not in credit card debt or other debt that is dischargeable in a Chapter 7 bankruptcy, you might be able to eliminate more debt in a Chapter 13 bankruptcy. When your home increases in value, it could hurt. Read more about it here.

3) You have a significant amount of non-dischargeable debt, such as taxes, student loans, or back child support. Those "priority debts" are not dischargeable in a Chapter 7 bankruptcy, but can be restructured in a Chapter 13 bankruptcy to make them affordable.

Alexander Bankruptcy Law Firm provides low cost Chapter 7 and 13 personal bankruptcies. $995 Chapter 7 and $2500 Chapter 13 plus court filing fee. Free consultation with a compassionate attorney who will handle your case personally. Call 24/7, available to meet with you around your schedule. Conveniently located in Central Phoenix along the Camelback corridor. Check out our FAQ here, and our Bankruptcy Myths here.

Mortgage-fraud complaints in quarter rise 88 percent from 2010

Mortgage-fraud reports to the Treasury Department jumped 88 percent in the second quarter — mainly because banks are re-examining loans from the housing boom and finding problems, the department's Financial Crimes Enforcement Network division said in its latest quarterly report.

The agency said the mortgage-collection arms of banks filed 29,558 suspicious activity reports involving possible loan fraud in the quarter that ended June 30. That compared with 15,727 that the mortgage servicers filed in the same quarter of 2010.

Most of the mortgages suspected of fraud closed during the height of the real-estate bubble, the financial-crimes division said. The report added that 81 percent of the complaints involved suspicious activities before 2008, and 63 percent described what appeared to be fraud occurring four or more years ago.

Read the rest of the article at the Seattle Times

Foreclosures Forecast to Hit 15 Million Homeowners

The foreclosure crisis has produced an overpowering series of affects across the U.S., destroying businesses, taking away livelihoods, tossing millions of homeowners out of their homes and pressuring home prices in the over-whelming majority of neighborhoods lower.

The crisis, first forecast by Housing Predictor almost five years ago as the first real estate research firm to forecast the mess, has had a devastating impact on the nation’s economy and sent 45 million Americans into unemployment. An estimated 7.6-million residential properties have been foreclosed since the crisis started, with another 7.4-million foreclosures forecast through 2016.

Banks, mortgage companies, state and federal loss mitigation programs and moratoriums delayed foreclosures in 2009 through early 2011 before formal foreclosures were sped up. Attorney generals representing 47 states with the U.S. Justice Department are still negotiating with the nation’s six biggest banks to work out an agreement on foreclosures that were mishandled in the robo-signing scandal. Bank servicing employees admitted to making at least hundreds of thousands of forgeries on foreclosure documents.

Read the rest of the article at Housing Predictor

Massachusetts preparing to file foreclosure lawsuits

Massachusetts on Wednesday said it is preparing to sue big banks related to unlawful foreclosures, dealing another blow to the multi-state talks aimed at resolving those investigations on a national scale.

"I have lost confidence that the banks will bring to the table an agreement that properly holds them accountable for wrongful foreclosures," Massachusetts Attorney General Martha Coakley said in a statement.

Federal and state officials met with representatives of several large U.S. banks this week with hopes of reaching a deal in the coming weeks.

Read the rest of the article at Reuters

Freddie and Fannie Reject Debt Relief

Home values have fallen so much in Arizona that almost half the people with mortgages there owe more than their homes are worth. So when federal money became available to help stem the tide of foreclosures, the state flagged that group for help.

If banks agreed to forgive some mortgage debt, Arizona offered to use federal aid to pay half the cost. Most banks declined. If banks would forgive some of a homeowners’ mortgage debt, the state said it would pay half, up to $50,000 of a $100,000 loan reduction. Despite the generous terms, most banks balked.

Only three homeowners have been approved for debt reduction since the program began in September 2010. A major obstacle has been that the two largest mortgage guarantors, Fannie Mae and Freddie Mac, will not participate — in Arizona or elsewhere. No loans are eligible for the state’s program if they were bought and held or securitized by the two companies, which are now under government control and guarantee more than 70 percent of the country’s home loans.

Read the rest of the article at the New York Times

Health problems rise with foreclosure rates

Losing your home, or worrying about losing it, is enough to make you sick, says a recent study that offers insight into the toll the foreclosure crisis is taking on homeowners' health.

"Our findings prove yet again that economic well-being and physical well-being are connected," said Princeton University economist Janet Currie, co-author of the study, published recently by the National Bureau of Economic Research.

"The foreclosure crisis is having a significant impact on mental health as well as on a wide range of preventable conditions that are susceptible to stress," she said.

Economic researchers looked at four states -- Florida, California, Arizona and New Jersey -- that are among the hardest-hit by foreclosures. Florida ranks second in the nation in foreclosures behind California.

Read the rest of the article at the Montreal Gazette

Solar projects wobbling in wake of Solyndra bankruptcy, increased competition

Stirling Energy Systems (SES) recently filed for Chapter 7 bankruptcy, which further complicates California's big push toward 33% renewable energy by 2020, as two massive solar thermal projects had been approved using the company's technology.

A Chapter 7 filing means the company is dead and remaining assets will be liquidated. In contrast, Chapter 11 and 13 bankruptcy mean the company will be reorganized and has a chance at survival.

Read the rest of the article at Independent Voter Network

Crystal Cathedral Bankruptcy: Creditors Committee Sues Schullers

Crystal Cathedral founder the Rev. Robert H. Schuller and his family have been sued by creditors in the California megachurch's bankruptcy case, according to court documents made public by the Los Angeles Times Monday.

The bankruptcy sale of Crystal Cathedral, the glass-walled Orange County church known for its "Hour of Power" broadcasts, has touched off a bidding war between a Roman Catholic diocese and a local university. The church's ministry, meanwhile, has announced that its campus is not for sale and launched a pledge drive to keep the cathedral.

In a legal complaint dated Sept. 30, creditors allege that church administrators, including the Schullers, were borrowing money from Crystal Cathedral's Endowment Fund, therefore receiving good salaries even as the church was experiencing financial malaise. The Crystal Cathedral serves a congregation of more than 10,000 members and broadcasts “The Hour of Power,” the longest-running television church service.

Schuller and his relatives allegedly borrowed about $10 million from the Endowment Fund between 2002 and 2009.

Read the rest of the article at the Christian Post

Bankruptcy talk rattles American Airlines' frequent fliers

The rocky financial situation at AMR Corp. - parent company of American Airlines - has unnerved some members of the airline’s AAdvantage frequent flier program, especially those sitting on a stash of unclaimed miles.

Many wonder what an AMR bankruptcy, if it happened, would mean for their ability to redeem these rewards.

Read the rest of the article at the Montreal Gazette

Kodak Bankruptcy Rumors Plague Photography Icon

Buffeted by foreign competition, then blindsided by a digital revolution, photography icon Eastman Kodak Co. is fighting for survival after a quarter-century of failed efforts to find its focus.

The 131-year-old company that turned picture-taking into a hobby for the masses and became singularly synonymous with capturing memories has tried to bat down sudden talk of bankruptcy. But concern about its grim prospects has hit fever pitch after it enlisted a legal adviser to explore ways to revive its sagging fortunes.

"With the advent of digital or even cell-phone cameras, Kodak wasn't in the game," he said. "I see the company now as something we will write about in history books."

Read the rest of the article at the Huffington Post

The Bankruptcy Files: Friendly's and Other Distressed Delicacies

It's been a big week for corporate bankruptcies, which trailed off earlier this year from the peak levels of 2009 and 2010 but have begun to mount again recently amid fears of a double-dip recession. At the same time, the spate of actual filings didn't stop the insolvency-minded from focusing their attention on others that might be looming.

Read the rest of the article at the Am Law Daily

Bankruptcy surfaces as issue in Kentucky auditor's race

The race to become Kentucky's next auditor comes with some unlikely baggage - the bankruptcy of one candidate deep in debt since an ambitious real estate development was torpedoed by a sinking national economy.

Republican candidate John T. Kemper III talks openly about filing for Chapter 11 bankruptcy protection in 2009 after his gamble to develop upscale homes on a tract along the Fayette-Jessamine County line went bust as the economy and housing market tanked.

Read the rest of the article at Cincinnati.com

Bankruptcies Related to Medical Debts on the Rise

According to a study conducted by credit counseling agency CredAbility, 20 percent of people receiving credit counseling -- which is a prerequisite for filing for bankruptcy -- cite medical bills as the reason that they need bankruptcy protection. The organization says this is a spike from the previous two years, when 12 to 13 percent of consumers seeking bankruptcy said that medical bills were the cause of their financial difficulties.
Michelle Jones, CredAbility's Senior Vice President of Counseling, told the New York Times that the reason for the spike is the perfect storm of rising medical costs and shrinking available job opportunities, which has made it necessary for many Americans to charge their medical bills on credit cards. This, coupled with the fact that many people feel like they must pay their medical bills no matter what, has created a financial downward spiral for many consumers.

Read the rest of the article at Digital Journal

Personal Bankruptcies Decline

Personal bankruptcy filings continued to slow in September as Americans were less eager to turn to the courts for financial relief.

The number of consumer bankruptcies dropped 17% to 108,517 in September compared to the same month a year ago, the American Bankruptcy Institute and National Bankruptcy Research Center said Tuesday. So far this year, the number of consumer bankruptcies was 10% lower than the same time period a year ago.

Filings also fell 4% from a month earlier, though the numbers aren’t adjusted for seasonal fluctuations.

Read the rest of the article at the Wall Street Journal