Chapter 7
A Closer Look: Colorado Bankruptcy, Unemployment Track Decline
In this two-part series on Americans and debt, Denver debt-relief attorneys examine employment, foreclosure and bankruptcy trends across Colorado and the nation. While we are happy to report these three key indicators are all showing signs of recovery statewide, we also know that for many struggling Colorado families, the turnaround simply isn’t coming fast enough.
In their latest report, the Bureau of Labor Statistics indicates that 45 states, along with Washington D.C., each recorded unemployment rate decreases for the month of January, and that 48 states (District of Columbia included) registered unemployment rate decreases from a year earlier. In both instances, only New York saw an increase, while a handful of states saw no changes. Overall, the national jobless rate currently rests at 8.3 percent, down .8 percent since January 2011.
Across Colorado, the unemployment rate dropped one percent (from 8.8 percent in January 2011 to 7.8 percent in January 2012) during the last year. Between December 2011 and January 2012, Colorado ran second only to New Hampshire for over-the-month job creation with a gain of 19,500 jobs. The year-to-year comparison also showed modest growth of 43,400 jobs between January 2011 and January 2012.
A review of Colorado bankruptcy statistics published by the Administrative Office of the U. S. Courts indicate an ongoing decrease in the number of bankruptcy filings since reaching a peak in 2010. Between January and February of this year, there were 3,690 bankruptcy filings in Colorado. During the same time frame in 2011, records indicate there were 3,912 filings. Comparing the two captures: there have been 222 fewer filings in 2012.
The number of January-through-February Colorado bankruptcy filings since 2008 are as follows:
~ January and February 2012 bankruptcy filings: 3,690
~ January and February 2011 bankruptcy filings: 3,912
~ January and February 2010 bankruptcy filings: 4,050
~ January and February 2009 bankruptcy filings: 3,129
~ January and February 2008 bankruptcy filings: 2,493
Denver bankruptcy lawyers recognize that statistics indicating a bump in job growth and a decline in bankruptcy filings does not spell relief for the many families facing mounting credit card and other personal debt while fighting to stay out of a Colorado bankruptcy courtroom. At the Law Office of Jon B. Clarke, we bring decades of debt-relief experience and know how to help clients obtain a fresh start. To schedule a free consultation, call us at (303) 779-0600 today.
Bankruptcy Myths and Truths
Many individuals are leery of filing for bankruptcy because of the myths surrounding this kind of legal debt relief, but an experienced Colorado bankruptcy attorney can clear up any misconceptions about the process and effects of bankruptcy on your assets and credit. When swamped by debt, you need a qualified bankruptcy attorney on your side. Here are the three most commonly held misconceptions about bankruptcy and the truth behind them.
Myth: You Will Lose Assets With Bankruptcy
Many people believe that their assets like their home equity or their vehicle will be liquidated in order to pay creditors. However, many assets are exempt from liquidation in bankruptcy proceedings, and even nonexempt assets can be protected with the help of an experienced attorney. Debtors who file for Chapter 7 bankruptcy can often keep their homes, vehicles, retirement homes or other valuables like heirloom jewelry or antiques.
Myth: You Can’t Get Loans After a Bankruptcy Filing
After filing bankruptcy, many people think that they won’t be able to get a loan for a vehicle or renegotiate their mortgage because of the filing. However, many debtors who have filed will find that they are offered loans in the wake of their bankruptcy ruling. These loans may have higher interest rates than other loans, but it is still possible to be approved for a loan or mortgage after filing. Some government mortgages are also available two or three years after the discharge of a bankruptcy.
Myth: Short Sales of Property or Renegotiated Loans Are Alternatives to Bankruptcy
Many lenders will push debtors to renegotiate loans in order to avoid defaulting and filing for bankruptcy, or lenders might suggest a short sale of a property in order to pay off outstanding debt. These alternatives to bankruptcy might sound like a good idea in the short term, but often the new terms of a loan aren’t favorable or the proceeds from a short sale aren’t enough to cover debt. After these types of debt relief are finalized, many debtors end up filing for Chapter 7 or Chapter 11 bankruptcy anyway. An experienced Colorado bankruptcy attorney will be able to discuss better alternatives to bankruptcy or help you file so that you can discharge your debts and protect your assets.
Maker of Tori Spelling’s clothing line files for Chapter 7
Often times, businesses immediately turn to Chapter 11 bankruptcy as their only option when they run into financial woes. However, Chapter 7 bankruptcy is another option for businesses as well as individuals, and may even be the most appropriate route in some situations.
This week, it was reported that the former owner of a clothing design and retail company that had partnered with former 902010 star Tori Spelling to release her children’s clothing line, Little Maven, recently filed for Chapter 7 bankruptcy liquidation.
HS of Delaware LLC listed its property in bankruptcy documents that were filed with the court Thursday, stating that the value of its licensing agreement with the Little Maven line was “unknown.” Overall, the company reported that it possesses only $3,584.55 in assets and owes $39.4 million in debts.
Apparently, the clothing design and retail company called Hartstrings was sold by HS of Delaware LLC to a subsidiary of the children’s apparel company Parigi Group Ltd. in April. While a spokesman for the Parigi Group Ltd. Said that the Hartstrings brand is “fully operational” at this point in time, he said that Spelling’s Little Maven line had not been acquired by the company.
The bankruptcy process is very complex, but when a company is facing financial troubles, its management can often choose between filing for Chapter 11 and Chapter 7 bankruptcy.
Chapter 11 is often called a “reorganization” bankruptcy and usually results in the debtor purposing a plan to keep operating the business and pay back creditors with future income. The plan is then overseen by the people who are owed money by the business.
On the other hand, the purpose of a Chapter 7 bankruptcy is to liquidate the business’s nonexempt assets and to use the funds to pay out its creditors. These cases are overseen by a court-appointed impartial trustee.
Source: The Wall Street Journal, “Children’s Clothing Designer With Tori Spelling Line to Liquidate,” Jacqueline Palank and Katy Stech, 6/2/2011.
Bankruptcy Rates are Down but Residents of Many States Still Struggling
Bankruptcy filings in April dropped from the number of filings in April of 2010 and there were ten thousand fewer filings in April as there were in March of this year. This is a good sign for the country as a whole but, despite the continuing downward trend, some states are still far above the national average.
The national average of bankruptcy filings per one million adults is around 2,000 but the average in Nevada is more than twice that in Nevada and more than one and a half times that is a handful of other states. These statistics show that Americans in many states across the country, including Colorado, are still having difficulty managing tough financial situations.
If you are experiencing financial problems you shouldn’t wait to take action and begin to formulate a plan to resolve your debt and work to get your finances back in order. Reaching out to an experienced Colorado bankruptcy attorney should be your first step when trying to figure out the best possible method for rectifying your financial problems.
An experienced Colorado bankruptcy attorney will carefully analyze your financial situation to determine what options may be available for resolving your debt. If you address your financial problems early on instead of waiting until the problem has grown out of control there is a good chance that there will be many possible options open to you for debt resolution. Your experienced Colorado bankruptcy attorney will help you identify the most appropriate method of debt relief so you can immediately begin the process of repaying your creditors and becoming debt free.
Bankruptcy: All Over the News
It isn’t just major and minor retailers that are filling the headlines with news of pending or active bankruptcy protection filings – celebrities, towns and entire states are talking about the possible benefit of filing for bankruptcy protection. With so many individuals, companies and organizations initiating a bankruptcy filing in order to clear up their financial troubles it’s only natural to feel as though filing for bankruptcy may be the best route for you to follow in order to get out of your financial troubles.
In reality though every person’s and business’ financial difficulties are unique and just because others who have had financial issues reminiscent to yours have repaid their creditors or absolved their debt with the help of bankruptcy it doesn’t necessarily mean that bankruptcy is the correct choice for you. If you are having financial problems you should reach out to an experienced Colorado bankruptcy attorney in order to determine the most suitable course of action for your situation.
A Colorado bankruptcy attorney will closely evaluate your level of personal or business debt in an effort to find all of the potential relief options available to someone in your situation. By providing you with a wealth of information on a number of different debt relief options your Colorado bankruptcy attorney can help you find the single best option for your unique financial situation. With the help of a Colorado bankruptcy attorney you can feel confident that you are embarking on the right path toward debt relief and that your financial problems will soon be resolved with as few headaches as possible.
Food Network celebrity and acclaimed chef submits Chapter 7 petition
High-profile Food Network chef and restaurant owner Geoffrey Zakarian recently petitioned for Chapter 7 bankruptcy protection citing the legal expenses involved in fighting a class-action lawsuit filed by a number of the chef’s employees. The employees’ legal suit is seeking around $1.25 million dollars in damages and penalties for a variety of wage and hour claims.
Zakarian’s attorneys claim that the cost associated with fighting this suit in court drove their client to seek protection under bankruptcy law. Besides providing Zakarian with a manageable way to handle his debt the Chapter 7 protections also put a hold on any lawsuits the plaintiff is facing, which allows Zakarian to gain a reprieve from the pressures of the suit.
When an individual or company files for bankruptcy, they are usually required to reveal their current assets as well as information regarding the identity of their creditors and how much they owe each one. Zakarian’s Chapter 7 petition placed his total assets around $50,000 while the chef’s liabilities totaled a much higher amount-approximately $1 million dollars.
Many people may be surprised that Zakarian is seeking financial help under the US bankruptcy code, especially considering his continued success on TV programs such as Iron Chef and Chopped. Yet, his petition if proof that filing for bankruptcy is not a sign of professional failure.
Successful companies and individuals occasionally run into pockets of financial difficulty and require assistance to regain stable fiscal ground. Often, options such as a Chapter 7 petition provide them with an opportunity to get back on their feet.
Source: Seattle Times, “Star chef, facing a suit, files for bankruptcy.” Nick Fox, 27 April 2011
Finding the Best Debt Resolution Option with a Colorado Bankruptcy Attorney
Having the vast majority of your debt eliminated and getting a clean, fresh start would seem like a highly favorable option, but filing a bankruptcy for eliminating debt isn’t always the best option. Many people consider pursuing a bankruptcy prior to considering the many other possible avenues of debt resolution because they believe that it will be the fastest and easiest way to get out from under a mountain of debt.
Prior to pursuing a personal or business bankruptcy it is critical that you speak to an experienced Colorado bankruptcy attorney to determine whether filing is a viable option for your situation. In many cases, an experienced Colorado bankruptcy lawyer may advise you to pursue another debt resolution effort, like negotiating with creditors, rather than attempting to file for bankruptcy protection.
A qualified bankruptcy attorney will thoroughly evaluate your financial situation and work to determine the best course of action for your unique financial situation. Bankruptcy is a very involved process that should be reserved as a last resort and pursued only when other debt relief options have been exhausted.
In order to get out of debt as quickly and with as few headaches as possible you need to make the most educated decision when it comes to your avenue of debt relief. If you’ve got financial problems you should immediately seek the help of a Colorado bankruptcy attorney in order to determine the best course of action for debt resolution for your unique financial situation.
American Apparel considering the benefits of bankruptcy protection
American Apparel recently released a statement alerting its customers and investors that the company is considering filing for bankruptcy protection. American Apparel-a retailer known for its employment policies, bright clothing, and controversial CEO-announced that falling sales and growing debt issues have caused the company to lose money over the 2010 operating year.
Although the retailer is pursuing an aggressive cost cutting strategy, they admitted that should their efforts not produce fast results, they are likely to file for Chapter 11 bankruptcy protections. Furthermore, a representative for the company announced that should Chapter 11 debt reorganization plans fail to appease their creditors, the company will seek extended protection under Chapter 7 of the Bankruptcy Code.
These two varying types of bankruptcy protection could produce very different results for the nationwide retail chain. When a business files for Chapter 11 bankruptcy, it allows the owners time to restructure their debts into a manageable payment plan while remaining in business. Under Chapter 11, the business becomes a Debtor in Possession (DIP) and is granted protection from creditors as executives work with a creditors’ committee and Bankruptcy court officials to negotiate a path for debt repayment.
In contrast, filing under Chapter 7 is a significantly less involved process. Chapter 7 allows a business to liquidate their nonexempt assets in order to pay outstanding debt. A trustee is in charge of creating a bankruptcy estate which manages the liquidation process.
American Apparel’s reported $19.3 million dollars in lost profits during the fourth quarter, reflecting a sales drop of 11.5 percent. Still the company remains optimistic that sales will increase during 2011, as some location’s numbers have been slowly improving. The acting company president stated that his first priority remains to augment sales and increase the company’s financial security.
Source: Chicago Breaking Business, “American Apparel says it’s facing Chapter 11-or 7.” Dow Jones Newswires, 1 April 2011
Bankruptcy Filings Rose 9 Percent in 2010, Experts Predict Reduction in 2011
Personal bankruptcy filings in 2010 hit one of the highest recorded numbers; approximately 1.53 million people filed for bankruptcy this past year, a 9 percent increase from the previous year. While 9 percent is the nationwide average, some areas of the country, mostly situated in the southwest and southeast, experienced a 24 or 25 percent increase. The bankruptcy rate for 2010 was the highest it has been since the restructuring of the law in 2005.
The bankruptcy revision was structured in a way that legislators hoped would reduce the amount of debt forgiven in the process. Law makers hoped that the revision would force more people to choose filing under Chapter 13, a process that encourages workouts and new repayment plans instead of Chapter 7 where debtors forfeit their assets. According to the American Bankruptcy Institute, only one third of debtors chose to file under Chapter 13.
According to surveys conducted by the nonprofit Institute of Financial Literacy, there has been an increase in the amount of middle-class families making over $60,000 per year or have obtained college degrees who have filed for bankruptcy.
Experts have predicted a reduction in 2011 of the number of personal bankruptcy filings. The prediction is based upon the tightened lending procedures and the fact that people simply are not borrowing right now. “[When] borrowing’s down,” said one law professor, “there’s less of a reason for people to take the legal step of filing for bankruptcy.”
As we discussed in our prior post, other changes to the Chapter 7 filing procedures could also have an effect on the number of personal bankruptcies filed in 2011.
Source: The Wall Street Journal “Bankruptcy Filing Leapt 9% Last Year” Sara Murray1/4/11
New Year Brings New Requirements for Chapter 7 Bankruptcy
New Years Day is a day for new resolutions and fresh starts after the mistakes of the past year have been forgotten or forgiven. While individuals across the nation make promises to themselves about changes they plan to make in their daily lives, the New Year is also a time for the federal government to make changes of their own.
This beginning of 2011 has been no different from the beginnings of years past, and the federal government has announced the new changes that were made to bankruptcy law. Specifically, changes were made to the rules governing the filing of personal bankruptcy under Chapter 7. These changes, in this economy, make it even more vital to seek out the assistance of an experienced bankruptcy attorney when considering the future of your financials.
Where a chapter 7 bankruptcy could generally discharge all personal debts through a liquidation of the assets owned by the debtor, the same individual may not even qualify for Chapter 7 if their income is high. Also, those who have already filed for bankruptcy must now wait at least eight years before doing so again. The changes may force individuals who once considered filing to seek alternatives to bankruptcy in order to lower their debt including creditor workouts that restructure previous payment plans.
Experienced attorneys remains abreast of new changes in the law and can help someone struggling with debt relief navigate the confusing rules and regulations that govern bankruptcy, and while creditors want to get paid, an attorney can make sure that repayment plans protect the individual’s interest and suit their needs.
Source: Mortgage11.com “New Bankruptcy Laws: Chapter 7 and Chapter 13 Bankruptcy Information” 1/4/11
Debt Collection Agency Seeks Protection from Creditors
No one is immune to the effects of an economic downturn, and even debt collection agencies that are assumed to be busier than ever these days have been forced to lay off employees or shut down operations entirely. The collection agency Hudson and Keyse, LLC of Painesville, Ohio was forced to fire its approximately 40 remaining employees and effectively close its doors on the first of this month.
In what could be described as an ironic turn of events, the once successful debt collection firm was forced to file for Chapter 7 bankruptcy protection nearly two years ago after being in business for over two decades. The once profitable company was home to over 150 employees in 2008 but now owes over $63 million to more than 200 creditors of their own. The company is in severe financial trouble and unable to pay their million dollar debt with the assets they now own totaling merely $288,000.
CEO Mark Finston attributed a large portion of the financial decline to “inappropriate management” within the company itself. Inside Accounts Receivable Management, a reliable source of industry news, reported that the company had purchased debt at nearly double its market value.
Hudson and Keyse, LLC owes money not only to creditors like Vion Holdings of Atlanta, but to many former employees as well. The company was unable to pay thousands of dollars worth of back wages to a handful of people who were let go from their positions at the firm. While the future of the economy is unknown, it is clear that Hudson and Keyse, LLC will not be the last business to file for bankruptcy or seek alternative solutions to their financial difficulties.
Source: BankruptcyHome.com “Debt collection firm files for Chapter 7 bankruptcy” Eric Sanderson 9/20/10