Bankruptcy Reader

Nobody likes it — neither the people, nor their attorneys and not even some of the judges who pass the ruling. And yet, there’s not much we can do about the new bankruptcy law (not so new seeing that it is almost a year old now). Just about everyone’s got something bad to say about the new law. That got me thinking: if the new law is so bad out here, there must be some place where the law is good, something we can point out to our legislators and say, “Now, that’s what I call a bankruptcy law!” Well that got me checking bankruptcy laws in the European Commission (EC) countries. And guess what I came up with? The laws there suck as well!!

Forgive my swearing, it’s just that I couldn’t help but cheer the fact that those guys are not much smarter than our guys out here. Well, so what’s so bad about their law? Some experts believe that the introduction of the EC Insolvency Regulation was one of the great legislative blunders of all time. This regulation, which primarily deals with corporates, requires judges to decide where a company’s main interests lie. They also have to decide under which jurisdiction’s laws proceedings should be conducted.

As is the case everywhere, the concept is fine. It envisages an insolvency regime that will provide a set of rules for the uniform application of insolvency laws across the European Union (EU). So where’s the problem? The regulation requires judges to go against centuries of deference to corporate form over corporate substance. Earlier, when a company failed, its financiers and other creditors knew that the company would have to subject itself to the insolvency rules applying in the country in which it was incorporated. Now, a court can decide in which jurisdiction an insolvency should take place. Pretty confusing, what? Once I reached this point, I decided that it was futile to study foreign insolvency laws!

While we have been witnessing a trend of rise and fall in bankruptcy filings ever since the new bankruptcy law came into effect, we are yet to know the long-term impact of the law. According to a report by the Administrative Office of the US Courts, one thing that is certain is that there may be a 10 percent increase in staff for federal bankruptcy courts. Communitydispatch.com reports:

Most of that impact was felt in clerk of court offices. The Act’s impact on bankruptcy judges is less clear, the report said, but the AO and the Federal Judicial Center continue to monitor case filings, workloads and case law developments.

Read more: Long-term Impact of New Bankruptcy Law Largely Unclear

If you haven’t heard about Laurence Kotlikoff, don’t worry — neither have I. It was only recently I learnt about an article he wrote in the Federal Reserve Bank of St. Louis Review that has instigated a flurry of commentary on the state of domestic policies. The reason: Kotlikoff poses the question, "Is the United States Bankrupt?" — according to him, while the country may not be so badly off right now, it’s definitely headed that way. Spectator.org reports:

Kotlikoff’s claim is supported by several carefully calibrated computer analyses that show how the promise to provide many trillions of dollars to today’s citizens — of which $67 trillion are unfunded — would spell disaster in years to come. Over the next 20 years, 76 million people — fully one-fourth of the total population — will transition into retirement, compounding the problem dramatically.

Read more: Bankrupt Thinking on U.S. Bankruptcy

How much do you know about the new Bankruptcy Law? If you are like most Americans, you know pretty little! A recent survey by the American Bankers Association reveals that more than 50% of the people surveyed did know about the new law but not much else. They had no idea of what the legislation actually contained.

So, in this ignorant light, many myths have begun to be taken for the real thing. One of the most incredulous ones is that you can file for bankruptcy as many times as you want! If it were that easy, you would find people running up bills in the millions and then filing for bankruptcy every time the creditor knocked on their doors.

If you have filed Chapter 7 bankruptcy anytime recently, then for the next eight years, you will not be able to file again. In case of Chapter 13, if you’ve filed once, then you will not receive a discharge within two years of a previous Chapter 13 discharge.

The new school year hasn’t brought any cheer to the Oakland Unified School District which is entering its fourth year of state control because of bankruptcy. Administrators claim that the district, which was $50 to $80-million in debt, is almost in the black thanks to some tough decisions. Kcbs.com reports:

Betty Olson-Jones, president of the Oakland Education Association, said teachers would love to see more positive changes. "We would love to see a credentialed classroom teacher in every single room. We would love to see class sizes that aren’t over the contract limit from day one." Which is why the union will be watching the schools carefully this week to hold the district to its promises.

Read more: Oakland District Starts Fourth School Year in Bankruptcy

A new study shows that the idea that more than half of all bankruptcies are caused by medical debt is incorrect. Far more common are bankruptcies related to credit card debts. Ncpa.org reports:

Mathur does not find support for the view that medical debts are the leading cause of bankruptcy filings. In fact, households who are most likely to file are those with primarily other forms of debt, such as credit card or car debts, who also incur medical debts.

Read more: MEDICAL BILLS AND BANKRUPTCY FILINGS

Visa and MasterCard are feeling the heat and how! They were on a roll until now as an increasing number of consumers resorted to plastic to beat the rise in costs. As gasoline rates increase, more customers are opting to use their credit cards to pay. So, what could be the problem?

Well, retailers are not too happy with how events are shaping up. They have gone to the extreme of asking Congress to step in and control certain procedures in credit card companies. Their main grouse relates to how much and in what way credit-card companies and issuing banks charge retailers for processing transactions. Retailers are asking for more regulation on interchange rates — the fee charged to retailers for processing a credit-card transaction. Visa recently announced that it would make interchange rate factors available to participating retailers online, but only to those that sign a non-disclosure agreement.

Bankruptcy may seem like the end of the road. However, you needn’t be so morose. There are still a few things you can do. Agreed your credit is in a bad shape now — you are left with the painful tag of bankruptcy. In addition, one of the biggest problems people have after filing is about their homes. ‘Can I salvage my home, can I refinance,’ I’ve heard such questions innumerable times. The answer is a big YES. Don’t believe me? Just complete a short online application TODAY.

You will soon receive quotes from multiple lenders who will compete for your business! This, even if you have filed bankruptcy in the past. I have known people who have been contacted by lenders in as little as 24 hours. In addition, these people had all the info on the best refinancing packages available! In just a couple of minutes, you can even be pre-qualified and the application is quick and easy.

And why would you want to refinance your home after bankruptcy. Well, you can:

• Lower your payments
• Get some spare cash for a vacation that will help soothe you
• You can even consolidate your debts, bills
• Alternatively, fund your child’s college education.

In short, you can do just about anything with the money you get from refinancing your mortgage. Refinancing helps you to dramatically lower your monthly payments. Do you really need to be stuck with that high interest rate and less than desirable mortgage terms just because you’ve gone bankrupt? Of course not! Mortgage lenders have hundreds of loan programs that will help you meet your financial goals.

And why would mortgage lenders be so eager to court you and provide you with the best packages possible. Well, you can be assured that they are not doing it out of the goodness of their hearts. They consider refinancing your mortgage after bankruptcy a good option because the risks involved in refinancing an existing mortgage are extremely low. So, go ahead and get quotes from multiple lenders. You have nothing to lose and you will find that mortgage lenders are prepared to offer you better terms than you thought possible.

It seems like the Congress has absolutely no idea what bankruptcy is all about. The fact that it took a federal judge to overturn a particularly dumb provision in the new Bankruptcy law just underlines this fact. Lufkindailynews.com reports:

The provision forbids an attorney from advising a client to take on additional debt before filing bankruptcy. Taking on more debt? Well, how about refinancing one’s house to get a better rate? So asked the judge.

Read more: Young: Congress shows how to avoid bankruptcy

You’ve gone through a bankruptcy and have lost almost everything, now you want to rebuild your life and what better way to do it than buying a house. So, if you’ve filed a Chapter 7 or 13, there is a waiting period and certain other things you need to consider before you buy that home. Hotlib.com reports:

To obtain a mortgage after filing a chapter 7 or chapter 13, you must wait at least two years after the bankruptcy is discharged. Moreover, individuals who have had a bankruptcy case dismissed must also wait two years before applying for a mortgage.

Read more: Buying A Home After Bankruptcy - How Long Should You Wait To Buy?