Bankruptcy Reader

By Priya Jestin, Staff Writer

Can a previous bankruptcy history debar you from running for elections? Don’t give an immediate yes or no. It is a very human tendency to try and simplify matters. So, let’s try to reflect on the issue with an example. Tyrone De’Andre Hawthorne is standing for the 17th Ward aldermanic seat. He’s been endorsed by the Illinois Committee for Honest Government. But Hawthorne, a volunteer for Jesse Jackson’s Rainbow/PUSH coalition, active Service Employees International Union member and laundry worker at Oak Forest Hospital, filed for Chapter 7 bankruptcy in October 2002.

Hawthorne’s explanation was that he had spent too much of his personal money for the previous elections and that left him bankrupt. Well, even if we accept the fact that being a people’s representative has nothing to do with personal finance, there’s still the issue of money management.

I know it is a bit patronizing to ask how a person who cannot manage his own money can be expected to manage that of an entire ward. But isn’t it true. We do expect a certain amount of credibility from our elected representatives, don’t we? I mean if we can expect the highest standard of public and private behavior from our Presidents, isn’t it only fair that we expect the same from all our elected representatives. So, while aldermanic candidate bankruptcies may not seem very important to most people, it’s important because it’s a reflection of someone’s ability to manage money, a key part of being an alderman.

By Priya Jestin, Staff Writer

Remember that song “To everything, turn turn, turn, there is a season…” (Forrest Gump) one of my all-time favorites and well, it seems a lot like one of those ‘life’s philosophies — simple yet absolutely true’. Don’t worry we’re not turning into a music blog — just wanted to bring in that bit of philosophy that there is a time and place for everything.

So if you are up to your eyeballs in debt and have tried every possible trick in the book to get out of it, what do you do? Declare bankruptcy of course, you’d say — that is if you are not a woman. What’s it with women and debt. You have absolutely no problem getting into debt but have a huge problem admitting that you have a problem?

And no, I’m not the one saying that. According to Consumer Credit Counselling Service (CCCS), a leading debt advice charity in the UK, thousands of women who are heavily in debt are refusing to file for bankruptcy even when it is their best option. Why? Because they don’t want the perceived stigma!

According to the charity, more than two thirds of people who chose bankruptcy are men while bankrupt women cling on to their false hopes. It is good idea to want to pay back your loans but it doesn’t help if you are going to kill yourself doing it. So I guess this is one area where the men seem to have got it spot on.

By Priya Jestin, Staff Writer

The state of New York doesn’t seem too happy with the New York Racing Association’s request for protection under Chapter 11 bankruptcy. It has filed a motion in federal court to dismiss the request because NYRA is not eligible to be a debtor under the bankruptcy code. The basic point here is that NYRA is supposed to be an "instrumentality" of the state and a "public agency" and hence, is not eligible to seek protection.

NYRA, a nonprofit company formed in 1955 has even sued the state after filing for bankruptcy. Its contention is that the association was insolvent in part because of the state’s failure to provide loans that had been approved by the legislature. Now, that’s what I call a Big Fight. Wonder if the people who work for the state and the agency are not appointed for the benefit of the state. So why should they be bickering among themselves?

If you want a more in-depth report, you could check out this ESPN story.

By Priya Jestin, Staff Writer

What’s with the church and me? Bankruptcy of course!! Sorry for getting off track. So, getting back to the churches and molestation cases, latest news has it that the Spokane Catholic Diocese has agreed to pay at least $48 million to people molested by priests as a part of a deal to emerge from Chapter 11 bankruptcy protection.

The plan still needs to be approved by U.S. Bankruptcy Judge Patricia Williams and the victims of sexual abuse, who are considered creditors. The Spokane diocese is one of four across the country that have been unable to withstand the tide of abuse claims and filed for bankruptcy protection. $20 million from six insurance carriers would finance the settlement.

Another $18 million will come from the sale of the bishop’s office building and other assets and contributions from other Catholic entities. The final $10 million will be got from the diocese’s 82 parishes.

In addition to the monetary part of the deal, Spokane Bishop William Skylstad will also have to personally visit each parish where children were abused to urge parishioners to come forward with claims of abuse. Skylstad will be required to send letters of apology to victims or their immediate families, to publish the names of all known abusers, allow victims to publicly address the parishes where they were sexually abused and to publish their stories in the diocesan newspaper.

By Priya Jestin, Staff Writer

You’d think that only in the developing countries were pensioners and other seniors got a raw deal. Developed countries like the US of A and UK were miles ahead when it came to caring for our seniors. Well, you can think again. Here’s one instance of extremely highhanded behavior, which just asks to be condemned.

A recent report in the Herald highlights the plight of an elderly man in the UK who was forced to the brink of bankruptcy by his council’s demands for care home costs. A man signed over his property to his son, without payment, nine years before moving into a care home.

The council calculated the value of the house as part of the father’s assets. This resulted in much higher care home costs for the poor old man. This, when the public purse is supposed to pay for care and nursing costs. The main reason this happened was because of a rule, which says that individuals reckoned to have the means are still liable for the cost of renting their room and for food. So, the house that this elderly man gifted away was added onto his list of assets to determine his means.

The Archdiocese of Portland recently filed a new bankruptcy plan with the US Bankruptcy Court. This new plan was in anticipation of a payment of $75 million to settle outstanding sex abuse claims against some of its clergy. According to the new plan, over $40 million will go to 143 people, and another $14 million has been set aside to cover claims by around 26 more people who may not have sued or settled.

The church has also set aside $20 million as a contingency fund. This fund is expected to cover any future claims. Insurance will cover over $50 million. The church expects to raise the remainder amount by liquidating some of its holdings. This will not include the parish or school property.

The Portland archdiocese holds the distinction of being the first one to file for bankruptcy in the face of civil litigation over sex abuse claims. Sorry, I’m not trying to be disrespectful here. It’s just that sexual abuse by one or a few priests affecting an entire archdiocese is not fair. I mean it is not fair to the congregation. And the best thing the Vatican and the churches can do is ensure that justice is delivered quickly.

According to the lawsuit, which was filed in 2002 the Vatican, the Archdiocese of Portland and the archbishop of Chicago allegedly conspired to protect a priest by transferring him from city to city, even though the church knew he had a history of committing sexual abuse.

What’s one to make of this recent bit of news that total bankruptcy filings jumped by 9.8% in the third quarter compared to the prior quarter, but, remain well below year ago levels? Are we supposed to believe that many Americans have suddenly found themselves to be flush with money so that they can be finally free of creditor bondage?

According to recent data released by Cardweb.com, during the third quarter total filings hit 171,146 compared to 155,833 for the second quarter and 542,002 one-year ago. While this was great news, it was a bit tempered with another foreboding news. Forecasts predict that there could be an increase in U.S. corporate bankruptcies by 17% in 2007. Well, we can probably take consolation in the fact that at least for now things are fine; or are they? Just a niggling doubt that refuses to go away: Are these figures telling the truth?

–By Priya Jestin, Staff Writer

The fact that it took the judiciary so long to understand that the new bankruptcy law passed in 2005 was flawed is the only thing that amazes me. I mean we all knew that there was something wrong with it and if I remember well, I’ve been harping on it for nearly a year now myself. So why did it take so long for this US district court judge in Minneapolis to rule that a portion of the new U.S. bankruptcy law unfairly restricted attorneys and violateed the First Amendment.

All we can say is that at least Judge James Rosenbaum decided to speak up. So what prompted this decision? According to the judge, a part of the law ‘forbids truthful and possibly efficacious advice” from an attorney to a client.’ The judge wanted to know, “If this is the government’s view of legal ethics, it is a form of ethics unfamiliar to the Court.”

What Rosenbaum’s ruling addressed was a provision in the new law that said attorneys couldn’t advise their clients to take on more debt as the clients consider filing for bankruptcy.

– By Priya Jestin, Staff Writer

It is painful enough to be in bankruptcy (Chapter 13) and unable to afford to live life the way you want to, are accustomed to. But to rule that a debtor cannot tithe or donate money to charity when in bankruptcy is downright ugly. This whole ugly row took place because a New York couple wanted to give $100 to their local church. They were asked to use the money to pay their creditors and not the church.

Painful isn’t it? Blame the new bankruptcy law. As per the new rules, you cannot file for a Chapter 7 unless your annual income is at or below a certain amount based on your state’s median income. If you are not so lucky, you have to perforce file under Chapter 13. This means you must repay your debts over a three or five-year period. One important requirement in a Chapter 13 filing is that you are allowed only certain ‘reasonable’ expenses. And donation to charity is definitely not reasonable according to the law.

How do you explain this phenomenon? On one side we are taught to be kind, giving and caring. And on the other, the country’s laws say you don’t have a right to give to the less privileged because your financial health isn’t too good. So what do you do? Fatten up already bloated creditors like MasterCard, Visa, American Express…. I cannot even begin to fathom or explain the depth of my disgust here.

Can we become such a consumerist society that we forget our downtrodden? And what is the law asking us to do — become even more selfish and self-centered? Gives you something to think about this festival season, doesn’t it?

It’s a sad day when bankruptcy prevents you from selling an old and established business. Agreed when you owe your creditors, you have no way out but pay them. But couldn’t something be worked out wherein you can save something that is a favorite with a lot of people AND get the money as well?

I’m talking about Carmella’s Cafea in New Hartford whose owner has been trying to sell the restaurant. The state of New York claims that the restaurant owes more than $400,000 in unpaid sales tax. Both the restaurant and its owner, Michael Ezzo, sought Chapter 11 bankruptcy protection two months ago. In addition to these taxes, the restaurant owes around $1.2 million. Well, anyone who wishes to buy the restaurant need not worry about building a clientele. Carmella’s already has a very dedicated following of customers.