Bankruptcy Reader

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.

I just stumbled on this bit of news and it was so interesting, I just had to share it with you guys. Did you know that New York City came REALLY close to bankruptcy just a little over 30 years ago? Sounds phenomenal doesn’t it? According to reports, the margin between solvency and default may have been paper-thin.

This happened in 1975 after the Ford administration rebuffed its appeals for help. A statement by Mayor Abraham D. Beame was drafted and typed and ready to be released on Oct. 17, 1975, if the teachers’ union did not invest $150 million from its pension funds in city securities. Nytimes.com reports:

“I have been advised by the comptroller that the City of New York has insufficient cash on hand to meet debt obligations due today,” the statement said. “This constitutes the default that we have struggled to avoid.” The statement, which pointedly invoked the comptroller, Harrison J. Goldin, a sometime Beame adversary, went on to say that the city had applied for and obtained a court order to preserve its assets from creditors.

Read more: When the City’s Bankruptcy Was Just a Few Words Away

– By Priya Jestin, Staff Writer

It’s a happy new year… or is it? American consumers are still reeling under the impact of too much expenditure and not enough income. Fuel prices have come down, but that’s not enough to lower costs. To compound problems, people are still losing jobs, interest rates are still not reasonable enough; credit card companies are breathing down debtors’ necks; and strict laws mean it’s not easy for you to declare bankruptcy.

So do you feel like you are in a whirlpool with no avenue for escape? If it makes you feel any better, there are millions more who are suffering the same predicament as you. By following a few simple tips, you can create a financial strategy to help you get out of this financial mess.

One of the first things you need to do is repay all the debts you can. Try creating a payment plan for credit cards so the repayment amount doesn’t mount to unbelievable rates. You can also consider other options like debt resolution to help you get out of debt.

By Priya Jestin, Staff Writer

I couldn’t resist the title. And nor can I resist this statement: There was one Tower, which fought bravely but couldn’t fight its destiny. And then there was a Tower that fought against all odds and is now ready to rise like a Phoenix from the ashes.

Okay guys, I’m sorry for letting myself go. But what does one do when you cannot get over a Tower hangover. Fine, getting on with the topic, I’m talking about Tower Automotive Corp now and not Tower Records. Kathleen Ligocki, president and chief executive of Tower Automotive Corp. recently announced that the firm was ready to emerge from bankruptcy. Three creditors are supposed to have agreed to invest up to $250 million to help restructure the company.

According to the restructuring plan, the senior secured debt would be refinanced and paid in full. All allowed administrative and priority claims will also be paid in full. A few unsecured creditors would be entitled to cash and can buy shares in the new company. Tower is one of 13 auto suppliers that filed for bankruptcy in the last five years, and one of six companies on a 2005 filing roster that included Delphi Corp. and Collins & Aikman Inc. Wish there were some Good Samaritan to save Tower Records too.

By Priya Jestin, Staff Writer

Credit card debt is a painful reality and we must find ways to deal with it. While throwing away your credit card or hiding it is an option, we must look at more long-term solutions. Solutions that will help us save a thousand or more dollars on credit cards. Here are a few suggestions:

• Lower your credit card interest rates and bills by paying off your entire bill each month.
• Wherever possible, use a check, cash or debit card for purchases. This way, you cannot spend more than you’ve got.
• If your balance is too large and you are finding it difficult to pay it off, you can try this method — pay as much as you can. Then go in for a card with a low APR (annual percentage rate).
• Reduce credit card fees by getting rid of all but one or two cards, and by avoiding annual, late payment, and over-the-credit limit fees.

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.

“I will file bankruptcy, and start everything all over again”, if this thought has been there in your mind, the only thing I would do is shoutting Heeellllllloooooooo!!! Sharp and shrill in your ear. Filing bankruptcy is not that easy, it is like filing invitation for a life-long damage to yourself.

Bankruptcy is listed as top-five negative events that affect our life. For a moment, you may feel as though you have done a smart job. But bankruptcy is like a boomerang that keeps reverberating in your life. Job and loan application often ask if you have ever filed for bankruptcy. In case you lie thinking that bankruptcy stage is history in your life, then you are gone, and you are left ‘BANKRUPT’.

–by Priya Jestin, Staff Writer

I may not be too off the mark if I said that most of us don’t know much about secured credit cards. Probably we don’t consider it too important or we don’t realize the necessity of knowing the difference between secured and unsecured cards.

The big difference between a secured credit card and an unsecured credit card is that a savings deposit serves as collateral for a secured credit card. So, if you need a secured credit card, the first thing you need to do is deposit money into a savings account. A secured card is good for people who have a less than perfect credit history. As you pay your bill on time each month, it helps you build a positive credit history.

When shopping for a secured card, you must ask the issuer to explain their policies regarding credit bureau reporting. When the bank reports on your positive payment record, it helps build a good credit history with the credit bureaus.