Bankruptcy Reader

Okay guys, I know that Yukos has nothing to do with us and I’m sure quite a few people are going “Yukos who??” But you guys just have to bear with me once more as I take out my angst against the inequities of the world. I know if you aren’t doing too well (well I know that was an understatement…Yukos has been on its deathbed for quite some time now) bankruptcy is one of the options you must seriously consider. So, the company, whose heyday came under founder Mikhail Khodorkovsky, is now onto its last hiccups. In Russia, state energy giants are already preparing to swoop on the company’s assets. There appears to be little chance of saving the group now, after a Russian court-appointed administrator told a creditors meeting last week that Yukos should be declared bankrupt.

Did you know that in the late 90s, Yukos was so powerful that it virtually huge stretches of western Siberia and even had plans to build its own oil pipeline to China? All this changed in 2003, when Yukos was hit with massive back tax bills and a vast judicial inquiry. Most critics believed that this was a Kremlin-orchestrated campaign to neutralize Khodorkovsky as he could have been a strong potential political opponent. The state also wanted to wrest back state control of key energy assets.

The court decision that came today was a foregone conclusion. Bankruptcy –despite record-high world market prices and despite the fact that the company is still extracting around half a million barrels of oil per day. And company executives are tired of crying out that their financial problems are not as bad as they are claimed to be.

Oh, and before I forget, Mikhail Khodorkovsky, once Russia’s richest man, is now serving an eight-year prison sentence for financial crimes in a Siberian prison camp. That’s what comes of doing business in a country like Russia.

Anybody who’s been through it will vouch for the fact that bankruptcy is the worst thing that could happen in your financial life. Of course, your debts do get wiped off but it is not so easy to wipe your credit report clean. Suntimes.com reports:

Bankruptcy is the worst thing to have on your credit report — and it will stay there for seven years! Now you have to look forward. If you still have one credit card in your name, use it wisely.

Read more: Credit history doesn’t end with bankruptcy

If you are a self-employed person, then you very well realize the importance of credit– it helps you get your business started, and also to expand it. But taking loans means there is a repayment factor and sometimes, the numerous loans are not easy to tackle. In the past year, consumer credit, or non-mortgage loans to individuals rose $4.4 billion, or 2.5 percent at an annual rate, to $2.174 trillion. While these figures may seem just that — figures — they hide the story of a growing number of people who are deep in debt and find it difficult to repay their loans. When your loans become larger than your repayment capacity, it could create a dangerous situation for any business because as every small businessman knows, cashflow problems have sounded the death knell for many a small business.

Some simple methods of improving cashflow include meeting your own debtors. If you need to repay your creditors, your debtors must pay you first. Meet people who are using your services on credit. Discuss with them modes of repayment, including installments and deadlines. This exercise will also help you weed out the bad debts. It will also give you an idea of how much of your finances you can expect to get back.

One very important thing is to keep paying for services like utility bills, water rates, rent. This will help you convince your creditors that you mean business and that you plan to honor your debts and repay all the loans. And if necessary, go in for some expert help and, possibly, even counseling. Some of the better-known counseling services include the ones offered by the Consumer Credit Counseling Service, Business Debtline, and The Bankruptcy Association.

Is middle-class America’s growing bankruptcy linked with its growing bankruptcy in areas of spirituality, morality, and education? Mike Rogers, in his article “America is Bankrupt” certainly thinks so:

Intelligent discussion on American TV and radio has now taken a back seat to a sort of childish one-upmanship. It’s no longer a question of who can thrust and parry their opponent into a corner through the use of beautiful English phrasing and logic; it’s now a question of who can belittle the other with snappy (but rude) one-liners.

Is it true that our changing mentality is affecting us financially? Have our values deteriorated to the point where we feel that using (or abusing) drugs and alcohol is a normal part of growing up or even long-term living?

I remember reading an American student-tourist’s memoirs where he mentioned how he was “rich” compared to the people of the third world countries he was touring. I nearly laughed out loud, and wanted to ask him, “If you are so rich, how come you are living in a cheap, dingy hotel instead of a 5 star, or even a decent clean hotel?” Our kids are working hard on part-time jobs so that they can then blow this hard-earned money on cheap drugs in third world countries. Talk about values!

I do not understand the mentality of the likes of Kevin Federline who borrows (takes) money from his wife so that he can take his friends to Las Vegas and have fun, while his wife looks after the newborn. Even more weird is Britney Spears who lets him do this. Whose values have gone for a toss? The husband’s, who feels it is perfectly acceptable to blow his wife’s hard-earned money with friends while she nurses the baby? Or the wife’s who married such a weirdo, and then thinks his behavior is acceptable/normal? Where are we heading?

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Here are some facts that may interest you: Americans have never before been so deep in debt as they are now. Bankruptcy lawyers are claiming that they are seeing an increase in the number of people who want to file for bankruptcy. But they also state that the law is too strict and many people are finding it difficult to file. And this is the most interesting fact that was revealed recently — that the number of filings has dropped to 20-year lows.

Confused with this medley of information which doesn’t seem to gel together? Don’t worry, I too was until I learnt another bit of news, one bit that seems like it could complete the jigsaw puzzle. It seems that though it’s been nearly a year since laws were passed making it harder to declare bankruptcy, there’s still confusion over who can file.

Bankruptcy lawyers say some bill collectors may be inadvertently telling debtors if they missed October’s deadline under the old laws - then it’s too late to file - which is incorrect. Seems to me like the collectors would rather have you confused so they can get their money. And believe me, I’m not too far from the truth on this one. According to authorities, some bill collectors are misleading people on purpose to pressure them to pay what is owed.

Even though there are new stricter requirements to file bankruptcy such as mandatory credit counseling - most debtors will still qualify for debt relief. So, if you are in dire financial straits, don’t believe everything your bill collector tells you. It’s best to crosscheck with a bankruptcy lawyer and then take corrective action.

There are many common methods of searching bankruptcy filings. The searches divide the various search matters into segments for convenience of customers. For example LexisNexis Services calls it as segment searching. It provides federal bankruptcy filings from all 50 states, with addition of the District of Columbia, Guam, and Puerto Rico.

The bankruptcy filings should contain a certain number of information that is essential for filing. The mention of petitioner’s name and address, filing number, filing date, chapter, trustee name (when available), status information and assets / liabilities (estimates provided by petitioner) are the clauses.

There are some systems that automatically display content and/or coverage description while you search for any of these sources. For additional details about these sources one should always review their source description. Using source information will give you view of a list of document segments.

The concerns are always high and the rush of blood reaches pinnacle when you think to be approaching bankruptcy-related matters. With the new bankruptcy law making its presence felt, you should identify whether there is need for filing bankruptcy or things could be turned around in your favor otherwise. How? Consider this.

Prior to filing for bankruptcy under either Chapter 7 or Chapter 13, you should have gone through credit counseling with an agency approved by the United States Trustee’s office. The purpose is to get an idea where the need is potent enough or whether an informal repayment plan will do the trick.

Although, counseling doesn’t bind you but if agency proposes a repayment plan, you have to submit the same to court with certificate(s) before you can file for bankruptcy. Once the bankruptcy case ends, you go through another round of counseling session to learn personal financial management. And after submission of proof to the court about requirement fulfillment you get a bankruptcy discharge.

Tired of looking for places to hide everytime your telephone rings? You know it’s one of your creditors calling to try to collect a payment that you don’t have. If this scenario sounds familiar, it is possibly time to check your options. However, be warned, many people have complained that after seeking help from credit counselors, they found themselves worse off.

Last year, 1,286 complaints were filed with the watchdog U.S. Better Business Bureau against credit and debt counselors. A few months back, IRS audits revealed that some of the nation’s largest edcuational credit counseling services existed mainly to prey on debt-ridden customers. To stop this exploitation, the IRS has canceled the tax-exempt status that it granted these services. Zwire.com reports:

IRS Commissioner Mark Everson said organizations looking to make a profit take advantage of consumers by securing tax-exempt status and making cold calls to people in desperate financial straits. They use scare tactics to sell the people "cookie-cutter" debt management plans that often are not geared toward reducing the consumer’s debt, and are too costly to pay.

Read more: Cracking down on credit counselors

Casino gambling and bankruptcy go hand in hand in Indiana. It is now almost ten years after the first gambling boat set sail in Indiana, and the effects are there for all to see. Indiana led the nation in the number of personal bankruptcies filed in 2005, with 11 of every 1,000 people filing being from Indiana. And anybody who wishes to verify the veracity of these claims just has to check the U.S. Bankruptcy Court statistics. As per these figures, the bankruptcy rate more than doubled in Indiana since 1996 — the year the first boats set sail.

Of course, detractors can always claim that bankruptcies have been on the increase nationally since the early 1980s. According to researchers, most of the increase happened after the bankruptcy laws were loosened in the 1970s. This combined with the rise of the credit card made it almost ‘impossible’ for people to not fall in debt. Post-trib.com reports:

Ohio, which has often joined Indiana in leading the nation in bankruptcy filings over the decade, saw an even bigger leap in the past decade from only a 2.8 percent rise in bankruptcies from 1980 to 1995 to a 12 percent jump from 1996 to 2004. The closest casino to Ohio is just across the river from Cincinnati in Lawrenceburg.

Interested? Read more

I’ve had quite a few people asking me about the UK method of dealing with bankruptcy. Yes folks, there are some things that these Brits can do… quite well! One of those things is how they deal with personal bankruptcy. In the US, heavily indebted consumers are left to their fate — it’s something like “you’ve brought it on yourself. Now suffer!” The British Government seems to empathize with its breed of debt-riddled consumers.

Let’s take a look at how the system works out here before we cross the Atlantic. Here you have the option of filing for bankruptcy or enrolling for a debt management program offered by credit counseling agencies. And look at the irony: many times, the payments for the debt management programs can actually be higher than simply making minimum contractual payments in the first place.

Now for how UK deals with its bankruptcy problem which is almost as bad as it is out here. In the UK, while bankruptcy is an option, indebted consumers can also seek to enter into a legally binding contract with their creditors (mostly unsecured creditors) called an Individual Voluntary Arrangement (IVA). After calculating the amount that the debtor can realistically pay every month, the IVA is scheduled. Typically, an IVA constitutes a 5-year monthly repayment proposal. In a typical proposal, you would have to offer a minimum of 25% of the debt outstanding to be repaid over a 5-year period.

Creditors prefer the IVA since they will receive some payment as opposed to bankruptcy where unsecured creditors will often receive zero or close to it. And the best part? In an IVA system, creditors are not allowed to contact the debtor at throughout the duration of the IVA and the fact that in most cases an large element of the debt will be ‘written off’ in 5 years time leaving the individual completely debt free.