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Archive for the ‘Commercial or Business Debt Management’ Category

While watching the ongoing coverage of the BP Oil Spill in the Gulf, Americans residing in areas outside of the Gulf may naively assume that only those individuals residing and working in the affected geographical areas will be financially impacted. Not true. Many American wallets across the country will be pinched and feel the painful costs in the aftermath of the oil spill.
A simple explanation of the Butterfly Effect metaphor; the concept is based in chaos theory and refers to the far reaching “ripple effects” that are created from the changes which occur once a butterfly flaps its wings. This theory is studied at length in both semi-classical and quantum physics. The Butterfly Effect also appears in popular culture, typically in time travel fiction and films such as drama, “The Butterfly Effect”, starring Ashton Kutcher.
Picture a giant green and yellow BP butterfly covered in dollar sign tattoos., flapping its wings furiously. Here is a preliminary list of who will be affected financially from complete to partial loss of income, reduction in spending or use of services, organizational cost cutting and finally increased cost of goods and services. This is by no means a full compilation, more like the tip of the iceberg.

1) Residents of the Gulf employed by fishing industry
2) Residents of the Gulf employed by hospitality and tourism industry
3) Small Businesses Owners in the Gulf such as diners, gas stations, and franchises
4) Residents of the Gulf employed by small businesses
5) Shareholders who rely upon BP stock dividends as part of their annual income.
6) BP employees
7) Vendors & Sub-contractors doing business with BP
Banks doing business with all of the previously listed
9) Insurance Companies, their employees and shareholders
10) Individuals and Businesses faced with higher insurance premiums
11) Individuals and Businesses who purchase gas and seafood products….
Due to spatial constraints, I end the list and trust that the point is made; the damage is not limited by geographical proximity. BP has set up a $20 billion trust for reparations, as of Day 65, over 51,000 lost wage claims were filed but only approximately 26,500 claim payments were actually issued by BP. Therefore, it is safe to assume that the other claimants are in some degree of financial crisis, with escalating credit card dependency and diminishing cash reserves. Chapter 7 or Chapter 13 Bankruptcy may be the only option for some individuals. Remember though, these are the people that are covered by BP’s $20 billion dollar trust fund, what about everyone else?

WARNING: The Latest Internet Scam is Credit Card Debt Termination.

Too good to be true because it is 100% False.
Consumers be warned- “credit card debt termination” scams are spreading like wildfire right now on the Internet. It usually goes by the name “Credit Card Termination or some variation on that name, and victims are paying thousands of dollars for this bogus service with the false belief that their debt will dissipate and their credit scored will not be damaged. By presenting a phony interpretation of banking and accounting laws, these con artists claim that they can legally terminate all of your credit card debt. They will go as far as hosting phony arbitrations and presenting victims with fake court documents.

This scheme has its roots in the income tax protest movement of the 1970s, where people were claiming that paying taxes was unconstitutional. Among professionals in the collection industry, the “Credit Card Termination” scam is called the “monetary protest movement.” The common theme with these programs is that our banking system prohibits banks from lending out their own money. So how does a credit card bank extend credit then? The protesters claim that the credit card agreement itself becomes a form of money the moment you sign it. Their premise is that the bank “deposits” your agreement as an asset on their books, and then any credit you use is offset as a liability against that asset. The scam promoters claim that all you need to do to wipe out your debt is demand your original “deposit” back from the bank, which will be offset against what you borrowed. THIS IS NOT TRUE or LEGITIMATE!! Just as the IRS shut down the tax protesters, the Attorney General’s Offices are actively prosecuting businesses and individuals for their participation in these fraudulent “debt termination” services.

Individuals in financial crisis may be tempted and lured in by the false promises and bogus testimonials advertised on the web pages of these, only to find themselves in worse trouble and greater debt. As I have advocated in other articles, investigate the credibility of any debt service providers you are considering. Are they licensed attorneys? Do they belong to the Better Business Bureau? Is there a physical office and address you can verify? Though you may feel stressed out, hopeless and think that things could not get any worse- trust me, get involved with one of these bogus “debt termination” scams and things will get a lot worse as your creditors, assuming that you have blithely ignored them, come after you.

(This report contains items about companies both in bankruptcy and not in bankruptcy. Adds Westland Devco in New Filings; Lehman and Barclays in Other Updates; Icahn’s Trump Entertainment in Briefly Noted; rental vacancy rates in Statistics; high-yield, high-risk debt issues in Commercial Debt Activity.)

By Carla Main

April 6 (Bloomberg) — Gems TV (USA) Ltd., the television retailer of gemstone jewelry products, yesterday sought Chapter 11 protection from creditors, citing as much as $500 million in debt. The television retailer of gemstone jewelry products, sought bankruptcy protection to sell its assets, after shutting down operations last month.

In papers filed in U.S. Bankruptcy Court in Wilmington, Delaware, the Reno, Nevada-based company listed less than $50 million in assets and said DirecTV was one of its largest unsecured creditors, owed $2.67 million.

DirecTV, based in El Segundo, California, the largest U.S. satellite-TV provider, asked a federal court last month to partially freeze Gems TV assets, the retailer said in a statement.

The company is seeking “an orderly liquidation of its assets,” Gems TV President Diane Schneiderjohn said in bankruptcy papers filed yesterday.

Schneiderjohn said the company’s “troubles were exacerbated this past year as nationwide economic conditions resulted in decreased discretionary spending.”

The case is In re Gems TV (USA) Ltd., 10-11158, U.S. Bankruptcy Court, District of Delaware (Wilmington).

For more, click here.

New Filings

New Mexico Developer Westland Devco Files Bankruptcy

Westland Devco LP, a New Mexico real estate developer, sought bankruptcy court protection after its lenders sued to foreclose on its assets.

The company, based in Albuquerque, New Mexico, listed assets of $361 million and debt of $198 million as of Dec. 31, in Chapter 11 documents filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware.

Westland owns 55,000 acres of real estate in Albuquerque, which it planned to develop into residential lots, according to court documents. The company hoped to subdivide about 19,000 acres of that land into 40,000 parcels to sell to homebuilders over the next 20 years.

Barclays Capital Real Estate Inc., a unit of London-based Barclays Plc, sued Westland in December, seeking to foreclose on the project.

The case is In re Westland Devco LP, 10-11166, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Other Updates

New York Racing Appeal from Order Allowing OTB to File Chapter 9

The New York Racing Association has filed a notice of appeal from a March 22 order by U.S. Bankruptcy Judge Martin Glenn in Manhattan that granted the New York City Off-Track Betting Corp., or NYC OTB, permission to file for relief under Chapter 9 of the U.S. Bankruptcy Code, according to court files.

The Racing Association had objected to the request for Chapter 9 p

The Obama administration on Friday will announce a broad new initiative to help troubled homeowners, potentially refinancing several million of them into fresh government-backed mortgages with lower payments.

The escalation in aid comes as the administration is under rising pressure from Congress to resolve the foreclosure crisis, which has put millions of Americans at risk of losing their homes. But the programs are likely to provoke protests among those who have kept up their payments and are not in trouble.

A major element of the new program, according to several people briefed on it, will be to encourage lenders to write down the value of loans for borrowers in modification programs. Until now, modification programs have focused on lowering interest rates.

In another major element, the government, through the Federal Housing Administration, will refinance loans from borrowers who have seen the value of their homes sink below what they owe. More than 11 million homeowners are in this position, known as being underwater. That aspect of the plan would apply even to borrowers who have not fallen behind in their mortgage payments.

The investors who own the loans would have to swallow losses, but would likely be assured of getting more in the long run than if the borrowers went into foreclosure. The F.H.A. would insure the new loans against the risk of default.

Many details of the administration’s plan remained unclear Thursday night, including the precise scope of the new programs and the number of homeowners who might be likely to qualify.

This much was clear, however: the plan could put taxpayers at increased risk. If many additional borrowers move into F.H.A. loans, a new downturn in the housing market could send that government agency into the red.

The F.H.A. has already expanded its mortgage-guarantee program substantially in the last three years as the housing crisis deepened, insuring more than six million borrowers. Those briefed on the plan said the agency would receive $14 billion in funds from the Troubled Asset Relief Program, cash it could dangle in front of financial institutions as incentives to participate in the new program.

A third element of the White House’s housing program will require lenders to offer unemployed borrowers a reduction in their payments for a minimum of three months.

An administration official declined to speak on the record about the new programs but said they will “better assist responsible homeowners who have been affected by the economic crisis through no fault of their own.”

The plan would essentially supplant the government’s earlier mortgage modification plan, announced a year ago with great fanfare. It has resulted in fewer than 200,000 people getting permanent new loans. As many as seven million borrowers are seriously delinquent on their loans and at risk of foreclosure.

While fewer people are beginning default, the number of borrowers who are seriously distressed is rising. In the fourth quarter, the number of households at least 90 days past due on their mortgages swelled by 270,000, according to a report issued Thursday by the Office of the Comptroller of the Currency.

“The government is seeking to persuade people to stay in their homes by aligning the mortgage debt with the asset value, which is only viable path to real housing stability,” said one person briefed on the government’s plans. Several people who described the plans would speak only on condition of anonymity, since they had not been authorized to disclose details ahead of a White House briefing scheduled for Friday morning.

The number of foreclosures in the fourth quarter rose 9 percent, to 128,859. Another 38,000 owners disposed of their homes in short sales, where the lender agrees to accept less than it is owed. Starting this month, the Treasury Department is promoting new rules to facilitate short sales. Borrowers who are trying to sell their homes in short sales can also put off foreclosure for many months.

Both lenders and the Obama administration have been under pressure to save many of the homeowners now in foreclosure limbo. Bank of America, the country’s biggest bank, announced this week that it would forgive principal balances over a period of years on an initial 45,000 troubled loans.

Lenders began offering principal forgiveness last year on loans they held in their own portfolios. In the fourth quarter, however, this process abruptly reversed itself. The number of modifications that included principal reduction fell by half.

A person briefed on the plan said it was unclear how many of the 11.4 million underwater borrowers in the country would qualify for the new program, but the number could well be in the millions.

The administration recognizes that some people’s finances have deteriorated so far that they are beyond help, the person said. People in that situation simply cannot afford the houses they are living in, the person said, even if the mortgages were reduced to match the current value of the homes.

“All these programs are geared toward people for whom it makes sense, for whom it’s workable when all is said and done,” the person said. “Some people are too far gone.”

Many people find themselves buried in debt; mortgages, credit cards and medical bills that appear to be endless. There are debt solutions to stop the landslide. Common reasons for spiraling debt include job loss, unforeseen emergencies, divorce and overspending. There are three primary options for an individual facing financial hardship and bad debt: debt management, debt settlement and bankruptcy.

Getting back on the right track can appear to be almost impossible, and individuals need to be aware that there are many scams and unethical advertisements for services that actually worsen their situation. To solve your debt problems, you need to understand your options and then seek out legitimate providers of debt settlement or bankruptcy services. In North Carolina, it is illegal for anyone other than a North Carolina licensed attorney or a non-profit organization to offer debt settlement services.

Harassing collection calls and billing notices can create high levels of fear and anxiety, and individuals will impulsively sign on with a pseudo-debt service without any research. High fees and fine print, which states that the fees must be accumulated first before paying $1.00 towards your debt, can make a bad financial situation even worse. Be wary of these illegal service providers- do your homework, ask for references, check that they are licensed to practice law in the State of North Carolina.

Currently, the North Carolina Attorney General is actively prosecuting fraudulent debt service providers and individuals illegally engaged in debt settlement practice.

About the Author: Joseph M. Bochicchio, PLLC. is a licensed Charlotte, NC Bankruptcy Lawyer with nearly 2 decades of experience in finance and law. His Charlotte Debt Settlement Law Firm is committed to providing legal and ethical guidance for North Carolinians facing financial hardship.