Deciding whether or not to file for bankruptcy is a stressful and complex situation that is further burdened by social stigmas. Nevertheless, bankruptcy might be the right choice for you. Many people believe that by filing for bankruptcy, they will never be accepted for loans again, but this is not true at all. Your bankruptcy stays on your credit report for 10 years, but you can get credit again within that time period, depending on your pre-filing payment history, income, debt-to-income ratio, and how well you pay off your debts after the filing.
Now that you know that filing for bankruptcy doesn’t doom your credit forever, the question remains: should you file for bankruptcy? Here are some general details to take into consideration when making your decision. Can You Avoid Bankruptcy? Firstly, you should sit down and take all aspects of your finances into consideration. You may find that you can alleviate your financial issues by fixing some problems or scaling back on certain purchases. Even though bankruptcy isn’t a permanent detriment to your credit, it is still a huge undertaking that shouldn’t be initiated unless you are sure it’s your best option. What Type of Bankruptcy Should You Choose? If you intend to go through with a bankruptcy, there are two major types that are commonly filed by individuals: Chapter 7 and Chapter 13. Chapter 7 bankruptcy can discharge most of your debt within a few months, but you may lose some of your personal property to help pay off the debt. Chapter 13 bankruptcy consists of a repayment plan based on your income, which helps you pay off your debts over the course of several years. It’s important to know whether or not you quality for the type of bankruptcy you intend to file. If your income is too high, you may be denied from Chapter 7 bankruptcy and be expected to pay off your debt. On the other hand, if your income is too low, you might not be able to manage a repayment plan. There are many other deciding factors, so make sure to consult an experienced bankruptcy lawyer to help you determine eligibility. Which Debts will be Forgiven? Some types of debts cannot be wiped out no matter what type of bankruptcy you file. Some examples of non-dischargeable debts include alimony, child support, and tax debt. Most of the time student loans also can’t be discharged. If the majority of your debt will not be wiped out by bankruptcy, there is little point in filing. What will Happen to Your Assets? Before you file for bankruptcy, you need to take your assets into consideration to make sure that you don’t lose something that puts you into a worse situation than before. If you have a lot of equity invested in your home, you may lose it if you file for Chapter 7 bankruptcy. However, filing may alleviate the strain from your mortgage when other debts are forgiven. If your income allows for Chapter 13 bankruptcy, your mortgage will be incorporated into your repayment plan. The fates of your other assets depend on the circumstances. Only certain items are included in exemption laws, and this depends on your location. Also, if you put an asset such as a car or boat down as collateral on a loan, the creditor may be able to take the property even if you are filing bankruptcy. Make sure that you would keep what you need to survive after the filing. What will Happen to Your Credit Card Debt? Bankruptcy is often an effective way to discharge your credit card debt, but not all credit cards debts can be wiped clean. Check with a bankruptcy lawyer to ensure that your credit card debt is dischargeable. Some examples of situations where credit card debt is a problem during a bankruptcy filing are if you lied on your application or used the cards to an extreme extent. What will Happen to Your Pension and Insurance Plans? Most pension and life insurance plans are protected from bankruptcy proceedings. However, you should check before you file to make sure that this is the case for any plans you have, including 401k, IRA, or life insurance policies. What Happens to Co-Signers? You need to make sure that co-signers on your loans will not be left with your debt after bankruptcy wipes it clean from your record. If you go through a bankruptcy filing with co-signed loans, the people close to you who helped you get your loan may be stuck with the entirety of the remaining payments. In general, Chapter 13 bankruptcy protects co-signers, but Chapter 7 bankruptcy does not. How will Bankruptcy Affect You? Fear of social stigmas shouldn’t stop you from considering bankruptcy, but you should be warned that the process involved in filing for bankruptcy is invasive and demanding. You display your entire financial life to the court. If you file Chapter 7, you may lose some of your personal property. If you file for Chapter 13, your spending habits will be scrutinized for several years. Taking the positive and negative factors into account, if you are still considering bankruptcy, it’s crucial to consult an experienced and certified bankruptcy specialist. Dan Higson, with Hathaway Perrett Webster Powers Chrisman & Gutierrez A Professional Corporation, is such a resource in the Ventura and Oxnard counties of California. He can help guide you along every step of the bankruptcy process, including your decision on whether or not to file in the first place. Call him today! (805) 644-7111 Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC is a debt relief agency pursuant to 11 U.S.C. 528(a)(4) and assists individuals, families, and businesses file for bankruptcy relief under the Bankruptcy Code. This website is a communication under California Rule of Professional Conduct 1-400. No legal relationship is created by the use of this website and no legal advice is provided. No guarantee or warranty is provided that your case or matter will achieve any particular result and testimonials and endorsements provided on this site do not constitute a guarantee, warranty, or prediction about your matter or case. This communication is made on behalf of Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC and DANIEL A. HIGSON, State Bar No. 71212 is responsible for its contents. All information contained on this website may be factually substantiated by a credible source, including data from the United States Public Access to Court Electronic Records (PACER) system. Detailed data and information is available on request.
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RadioShack is an American chain of electronics stores that has experienced both highs and lows through its long history. It was founded in 1921 by brothers Theodore and Milton Deutschmann to sell ham radio equipment. The company originally consisted of a single location for retail and mail order sales. RadioShack issued its first catalogue in 1939, and even extended into the high fidelity music market by producing its own private label products with the brand name Realist. Throughout its history, the company constantly attempted to rebrand itself, changing its name, slogan, management, and purpose time after time.
By the 1960s, RadioShack had expanded its mail order business, and included 9 stores. However, at this time the company fell on hard times and had to file for bankruptcy. Luckily for RadioShack, entrepreneur Charles Tandy took an interest and bought the company for $300,000 in 1962. Tandy Corporation was interested in expanding their leather goods company into other hobby businesses. In order to make RadioShack viable again, Tandy ended the mail-order business and credit sales and dropped most of the upper management positions. Tandy led the ailing company through a period of growth and success in the ‘60s and ‘70s before his death. In the ‘80s, RadioShack attempted to edge into the IMB PC compatible market. This didn’t last long, however, as the company struggled against rivals like Dell. In 1982, people were moving towards owning their own phones instead of renting them after the breakup of the Bell System, and RadioShack jumped on board by offering 20 models of home phone. In the ‘90s, RadioShack once again attempted to change, this time having to restructure over 200 store locations. The company wanted to shift away from components and cables towards more mainstream consumer electronics, which it continued to do into 2015 by selling things like cell phones. In 1994, the company began to offer inexpensive, non-warranty repairs for over 45 brands of electronics. In 1998, RadioShack claimed to be the largest seller of consumer telecommunications products in the world. By 2011, smartphone sales accounted for over half of the company’s revenue. Unfortunately, management issues, a stream of bad CEOs, and tough competition led to several bouts of restructuring, purging of management, and financial instability after the turn of the century. In 2005, a switch in the wireless providers that RadioShack featured caused a huge decline in profits. This along with management problems led to several cuts in 2006. Nearly 500 stores were closed, and the stock prices plummeted. The company also attempted to cut overhead expenses by laying off a fifth of its headquarters workforce. Since 2006, RadioShack continued to close more stores and lay off more people. At the beginning of 2015, the company faced over $1 billion in debt and filed for Chapter 11 bankruptcy in the hopes that another restructuring would save it. Late in 2015, the bankruptcy plan was approved, and RadioShack began the liquidating funds to pay off its creditors. The chain was forced to shutter or close nearly all of its remaining 4,000 stores. In September of 2015, many problems still faced RadioShack’s Chapter 11 plan. Standard General LP and Wells Fargo claimed that RadioShack was obligated to pay the substantial legal fees accrued from lawsuits with junior creditors, estimated at around $15-20 million. This stipulation would have probably led to the collapse of all of the creditor repayment plans. Luckily, the junior creditors decided to drop the lawsuit instead. As part of the restructuring plan, Standard General bought RadioShack’s brand and saved around 1,700 stores. Standard General, Wells Fargo, and other banks will provide $9.4 million in cash and savings to a liquidation trust, and Standard General will give up its rights to $30 million in unsecured bonds. Time will tell if Standard General will manage to salvage anything from RadioShack’s remains. If not, this longstanding household name will go down in history as yet another company that failed to keep up with the speed of modern technological advances. Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC is a debt relief agency pursuant to 11 U.S.C. 528(a)(4) and assists individuals, families, and businesses file for bankruptcy relief under the Bankruptcy Code. This website is a communication under California Rule of Professional Conduct 1-400. No legal relationship is created by the use of this website and no legal advice is provided. No guarantee or warranty is provided that your case or matter will achieve any particular result and testimonials and endorsements provided on this site do not constitute a guarantee, warranty, or prediction about your matter or case. This communication is made on behalf of Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC and DANIEL A. HIGSON, State Bar No. 71212 is responsible for its contents. All information contained on this website may be factually substantiated by a credible source, including data from the United States Public Access to Court Electronic Records (PACER) system. Detailed data and information is available on request. Beware of Debt Relief Scams
Anyone who has experienced debt knows how stressed out and desperate it can make you feel. It seems impossible to pay off debts while more bills are constantly coming in, and a person can easily become desperate enough to seek relief from other sources. When someone is in this position, it is easy for scammers to take advantage of them by offering hope with no actual solutions, resulting in even more problems. There are many companies out there that scam struggling families out of what little money they have left, but the government is working on rooting them out. Recently, the Federal Trade Commission went after a debt relief operation called DebtPro 123, and its effort ended in a settlement of $7.9 million. How the Scam Worked The foundation of any debt relief scam is making false promises to desperate people. According to the FTC, DebtPro 123 told its clients that its “debt resolution program would completely resolve consumers’ credit card and other unsecured debts (including department store accounts, personal loans, medical bills, student loans, and accounts with collection agencies.” They claimed that they reduce their clients’ debts by 70-80%, including fees, and they ensured that their clients would “become debt-free quickly and comfortably”. Any company that advertises a “quick” and “comfortable” plan for debt relief is dishonest. Paying down your debts will be a long and painful process, even with good organization and outside help. Promises vs. Reality DebtPro 123, along with other convincing scams, use professional-sounding words and methods to entice potential customers into their trap. DebtPro 123 claimed to have a “debt calculator” that backed up their claims. The company also had a two-step program for debt relief. The first step was the client investing in a “Creditor Fund/Settlement Account” to be used for negotiations with creditors. The second step was for the client to wait while DebtPro 123 worked on getting their debt terms changed. While the client awaited financial relief, DebtPro 123 urged that they stop paying their bills and stop communicating with all creditors. Since nothing was actually being done, this resulted in the piling up of bills, interest, late fees, and other penalties. The company claimed that they would remove negative information from the clients’ credit files. This was an empty claim, since most negative credit information will remain on reports for seven years no matter what. DebtPro 123 also assured its clients that they had a skilled legal team backing up their claims. They told clients that, “the attorneys will communicate directly with your creditors and debt collectors via the mail and telephone. They will audit your bills and the collection methods being used by the creditors to determine if your consumer rights have been violated.” Shockingly, when the FTC investigated DebtPro 123, they found that there was “no legal department, ‘legal in-house counsels’ or any attorneys on staff.” What Actually Happened to the Clients The people unfortunate enough to trust DebtPro 123 ended up in a much worse situation than before. Money that should have gone towards paying off debts instead went into DebtPro 123 fees. Creditors who were not receiving payments filed lawsuits against the debtors. The clients ended up more in debt, causing some to lose their homes, have their wages garnished, or file for bankruptcy. Debt Negotiation vs. Bankruptcy If you are struggling with debt and considering debt relief options, this article may have filled you with even more anxiety, but it’s important to seriously look into any company that claims that it can provide aid before giving them money. You may also want to consider bankruptcy as an option, depending on your circumstances. There are differences between how the saved money is handled in debt negotiation verses bankruptcy. In debt negotiation, all of the money that is saved is taxed, so you still end up having to pay off some of the debt. With bankruptcy, there is no charge for discharged debts. If you are in serious need for either debt negotiations or bankruptcy, you should first consult an attorney to make sure your money goes to the right place. Dan Higson is experienced in all aspects of California debt laws. Call today if you have any questions about your situation. Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC is a debt relief agency pursuant to 11 U.S.C. 528(a)(4) and assists individuals, families, and businesses file for bankruptcy relief under the Bankruptcy Code. This website is a communication under California Rule of Professional Conduct 1-400. No legal relationship is created by the use of this website and no legal advice is provided. No guarantee or warranty is provided that your case or matter will achieve any particular result and testimonials and endorsements provided on this site do not constitute a guarantee, warranty, or prediction about your matter or case. This communication is made on behalf of Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC and DANIEL A. HIGSON, State Bar No. 71212 is responsible for its contents. All information contained on this website may be factually substantiated by a credible source, including data from the United States Public Access to Court Electronic Records (PACER) system. Detailed data and information is available on request. Chapter 9 of the Bankruptcy Code provides for the reorganization of municipalities. These include cities and towns, counties, taxing districts, municipal utilities, and school districts. Although it is unlikely that you will ever take part in Chapter 9 proceedings, they are a very interesting part of bankruptcy law that can have widespread effects.
History of Municipal Bankruptcies The first municipal bankruptcy legislature was enacted in the middle of the Great Depression in 1934. When drafting the legislation, Congress had to be particularly careful not to interfere with the sovereign powers of the states as given by the Tenth Amendment to the Constitution. Even with this caution, the Supreme Court ended up declaring the 1934 Act unconstitutional as an improper interference with the sovereignty of the states in 1936 in the caseAshton v. Cameron County Water Improvement District. In 1937, Congress enacted a revision of the Municipal Bankruptcy Act. This version was upheld by the Supreme Court in the 1938 case United States v. Benkins. The law has been amended several times since then, but is still holding strong. Chapter 9 cases are relatively rare. Since the creation of municipal bankruptcies, there have been fewer than 500 petitions filed. However, since they cover such a large area when compared to other chapters, they can have extensive and lasting results. For example, the 1994 filing by Orange County, California, involved hundreds of millions of dollars in municipal debt. Municipal Bankruptcy Basics Chapter 9 bankruptcy provides protection for financially distressed municipalities from creditors while they restructure their debts. This debt adjustment can involve the extension of debt maturities, the reduction of principal or interest, or the refinancing of a debt through a new loan. Unlike other chapters, municipal bankruptcy contains no provisions for the liquidation of assets and distribution of proceeds to creditors. This type of liquidation would violate the states’ sovereignty over internal affairs from the Tenth Amendment to the Constitution. Because of such restrictions, the bankruptcy court is much less active in Chapter 9 cases. The court is mostly limited to approving the petition, confirming the plan for debt adjustment, and ensuring that the plan is implemented. Eligibility for Chapter 9 Chapter 9 bankruptcy can only be filed by a municipality, which is defined as a “political subdivision or public agency or instrumentality of a State.” This includes cities, counties, townships, school districts, and public improvement districts, as well as some general service providers such as bridge and highway authorities. When a municipality files for Chapter 9 bankruptcy, there are four further eligibility requirements set by Bankruptcy Code:
When a municipality files for Chapter 9 bankruptcy, they must provide a list of creditors and be assigned a judge. Other types of bankruptcy begin with a clerk assigning the case to a particular judge. However, at the beginning of a Chapter 9 case, “the chief judge of the court of appeals for the circuit containing the district in which the case commenced [designates] the bankruptcy judge to conduct the case.” This provision was designed to keep politics out of municipal bankruptcy cases and ensure that the judge would be able to handle such a case. At the beginning of the case, notices must be published publicly. Objections may be filed, and hearings will be held for each objection. If the petition is not dismissed because of an objection, the case will proceed. Automatic Stay Automatic stay applies to Chapter 9 bankruptcy and halts all collection actions against the debtor after filing the petition. This protects officers of the municipality from creditors acting on behalf of a prepetition debt. Court Limitations The bankruptcy court is much more limited during Chapter 9 cases than other types of bankruptcy cases. The court cannot interfere with:
Each of these rules is in place to ensure the constitutionality of the proceedings. Otherwise the court might obtain control over a governmental or political affair or property. Powers of the Creditor During a Chapter 9 bankruptcy case, the creditors have a more limited role to play. There is no first meeting of creditors, and they cannot propose competing plans. If approved, the debtor’s plan is binding even on dissenting creditors. There is a creditor’s committee similar to other types of bankruptcy chapters. Its duties include employing attorneys, accountants, or other agents for their own representation, consulting with the debtor, and participating in the plan’s formulation. Powers of the Debtor Overall, the debtor has more power over the case during Chapter 9 bankruptcy. A municipal debtor may use its property, raise taxes, and make expenditures freely. It may also borrow money during the Chapter 9 proceedings as an administrative expense and employ professionals without court approval. These aspects are crucial to the survival of the municipality during the case. Confirming a Plan Seven general conditions must be met if a plan is to be accepted by the bankruptcy court in a Chapter 9 case:
A municipal debtor receives a discharge in a Chapter 9 bankruptcy case after three requirements are met:
Conclusion Chapter 9 cases are a rare and interesting aspect of bankruptcy law. Although there are many similarities with other bankruptcy chapters, since municipalities are entrenched within state governmental establishments, the rules have been altered significantly in order to remain constitutional. Hopefully the next time you see a Chapter 9 case in the news you will have a better understanding of what is involved. Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC is a debt relief agency pursuant to 11 U.S.C. 528(a)(4) and assists individuals, families, and businesses file for bankruptcy relief under the Bankruptcy Code. This website is a communication under California Rule of Professional Conduct 1-400. No legal relationship is created by the use of this website and no legal advice is provided. No guarantee or warranty is provided that your case or matter will achieve any particular result and testimonials and endorsements provided on this site do not constitute a guarantee, warranty, or prediction about your matter or case. This communication is made on behalf of Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC and DANIEL A. HIGSON, State Bar No. 71212 is responsible for its contents. All information contained on this website may be factually substantiated by a credible source, including data from the United States Public Access to Court Electronic Records (PACER) system. Detailed data and information is available on request. American Apparel, the notorious American-made clothing manufacturer and retailer based in Los Angeles, has been struggling for years. The company rose to prominence after being founded in 1989, but harsh competition has developed from retailers such as H&M and Forever 21 that provide cheaper fashionable clothing for their young customers.
American Apparel has not made a profit since 2009, and in 2014 its founder and CEO Dov Charney was ousted due to allegations of misconduct in the workplace. In August of 2015, the company warned investors that it won’t be able to “sustain operations for the next twelve months,” and American Apparel files for chapter 11 bankruptcy on October 5th. Chapter 11 Bankruptcy Filing for Chapter 11 bankruptcy will give the failing company a chance to reorganize while continuing production. The retailer claims that it has already come to an agreement with its creditors on a restructuring plan that addresses 95% of its secured debts. Currently the company employs around 8,500 people in over 200 stores spread across nearly 20 countries but the plan proposed to the court includes shedding some of its unprofitable stores. CEO Struggles The relationship between American Apparel and its previous CEO continues to be rocky, and it is not clear how the bankruptcy will affect Dov Charney. He has continued to attempt to regain control since he was the target of several lawsuits for sexual harassment and ousted from his position. However, Charney still owns 5% of the company. He also sued American Apparel, escalating the company’s financial problems. The Downfall American Apparel has acknowledged several marketing aspects that have been dragging sales down. The company ignores seasonal planning by continuing to produce swimsuits in the fall and selling the same offerings all year round. This results in a stale sales appeal. Also, the company’s online presence is weak compared to other clothing retailers. Only about 11% of American Apparel’s revenue comes from the website, while its competitors tend to bring in 20% from online sources. The new CEO, Paula Schneider, has outlined a new plan to re-establish the company’s image through changes in marketing, products, and store design. The Filing According to the bankruptcy filing, American Apparel lost around $300 million between 2009 and 2015. It listed $199.3 million in assets and $397.6 million in debt. It obtained $90 million in bankruptcy financing from secured creditors. The company plans a debt-for-equity exchange, which involves converting $200 million senior secured notes into stock. Unsecured creditors will receive $1 million payments from a litigation trust. The company’s leaders are optimistic about its future, stating during the filing that the restructuring plan “will save thousands of American manufacturing jobs and will preserve a true American apparel manufacturer.” Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC is a debt relief agency pursuant to 11 U.S.C. 528(a)(4) and assists individuals, families, and businesses file for bankruptcy relief under the Bankruptcy Code. This website is a communication under California Rule of Professional Conduct 1-400. No legal relationship is created by the use of this website and no legal advice is provided. No guarantee or warranty is provided that your case or matter will achieve any particular result and testimonials and endorsements provided on this site do not constitute a guarantee, warranty, or prediction about your matter or case. This communication is made on behalf of Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC and DANIEL A. HIGSON, State Bar No. 71212 is responsible for its contents. All information contained on this website may be factually substantiated by a credible source, including data from the United States Public Access to Court Electronic Records (PACER) system. Detailed data and information is available on request. Larry King has been a renowned host on quality shows for both television and radio stations for decades. He has experienced great success since his career took off in 1978 as an all-night national radio broadcaster. But did you know that before then, he struggled to get by financially and even had to file for bankruptcy? Here is a quick version of the Larry King bankruptcy story.
By 1978, King had fallen on hard times. He had already begun his trend of repeated marriage and divorce, which drained his funds to the point that he owed over $350,000 to creditors. That year he filed for bankruptcy. With his fresh start, King’s luck turned around. He was offered a position to host his own radio talk show, where he quickly became an iconic voice of America. In 1985, he became even more famous on his television show Larry King Live, which ran until 2010 on CNN. More recently, he has been hosting Larry King Now which is available online. Obviously Larry King did not let debt and bankruptcy control his life. He continually looks towards the future in both his private and public lives, and although I wouldn’t recommend taking the same path that he did with marriage, he does provide a good example for everyone who has experienced financial hardship. Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC is a debt relief agency pursuant to 11 U.S.C. 528(a)(4) and assists individuals, families, and businesses file for bankruptcy relief under the Bankruptcy Code. This website is a communication under California Rule of Professional Conduct 1-400. No legal relationship is created by the use of this website and no legal advice is provided. No guarantee or warranty is provided that your case or matter will achieve any particular result and testimonials and endorsements provided on this site do not constitute a guarantee, warranty, or prediction about your matter or case. This communication is made on behalf of Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC and DANIEL A. HIGSON, State Bar No. 71212 is responsible for its contents. All information contained on this website may be factually substantiated by a credible source, including data from the United States Public Access to Court Electronic Records (PACER) system. Detailed data and information is available on request. The Disney brand has been a household name around the world for decades, but did you know that even the illustrious Walt Disney had a rocky financial start? Here is the Walt Disney bankruptcy story.
In 1922, Walt Disney incorporated his “Laugh-O-Gram” film studio with the intention of producing animated fairy tales. He found a financial backer from New York and began to assemble a team of skilled animators. Amusingly, the studio had a rodent infestation, and one particular mouse had enough personality to earn the name “Mickey” and inspire the creation of the famed mouse character. Unfortunately, the backing firm went broke. This meant that Disney was no longer able to pay his employees or his debts, and the company filed for bankruptcy. Disney then struggled to find the money to buy a bus ticket to Hollywood, where he would make a new company and name it after himself. Lucky for him, his new company worked out, with a little help from Mickey. Even with Mickey’s aid, this wasn’t the end of Disney’s financial struggles. He came to the brink of bankruptcy once again prior to the release of Snow White and the Seven Dwarfs. In 1937, in the middle of the production of the film, Disney was forced to approach a bank for a loan to complete his work. This loan allowed Disney to be able to pay his staff and complete the film. These days it can seem like “Disney” is just the name of a colossal corporation that puts out an unending supply of movies, shows, and merchandise. It’s important to take a moment and look at the company’s past and see that its founder was just as human as any of us. Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC is a debt relief agency pursuant to 11 U.S.C. 528(a)(4) and assists individuals, families, and businesses file for bankruptcy relief under the Bankruptcy Code. This website is a communication under California Rule of Professional Conduct 1-400. No legal relationship is created by the use of this website and no legal advice is provided. No guarantee or warranty is provided that your case or matter will achieve any particular result and testimonials and endorsements provided on this site do not constitute a guarantee, warranty, or prediction about your matter or case. This communication is made on behalf of Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC and DANIEL A. HIGSON, State Bar No. 71212 is responsible for its contents. All information contained on this website may be factually substantiated by a credible source, including data from the United States Public Access to Court Electronic Records (PACER) system. Detailed data and information is available on request. Billionaire Donald Trump has kept himself in the limelight throughout his career. He started out working for his father’s company in real estate then quickly rose to fame as a casino mogul when he purchased the Taj Mahal and several other Atlantic City casinos. His notoriety spread when he branched out into reality television, and now he’s even testing his skills in politics.
Not everything has gone perfectly in Trump’s career, however, as he has several bankruptcies under his belt. He shows no embarrassment towards his financial history, and even brags about how well his companies have fared through the bankruptcy process. During a Republican presidential debate, he stated, “I have used the laws of this country…the [bankruptcy] chapter laws, to do a great job for my company, for my employees, for my family.” Trump has never filed for personal bankruptcy, but he has used Chapter 11 bankruptcy to restructure his businesses four times. The first bankruptcy was probably the most personally detrimental one that Trump has had to file. In 1991 his Trump Taj Mahal Casino went under. In order to fund the restructuring, Trump had to give up a yacht, his Trump Shuttle airline, and half of his ownership stake in the Taj Mahal Casino. The largest creditor at the time was Carl Icahn, who held $400 million in bonds. Less than a year later, in 1992, Trump was back in the bankruptcy court for Trump Castle Associates, a company that oversaw several of his casinos. This bankruptcy included the Trump Plaza Hotel in New York, the Trump Plaza Hotel and Casino in Atlantic City, and the Trump Castle Casino Resort. During the filing, Trump gave up half of his interest in the New York hotel, but retained his control over the other locations. After a lengthy break, Trump returned to the bankruptcy court in 2004 for his Trump Hotel and Casino Resorts. This included a restructuring for several of his Atlantic City casinos and a riverboat resort in Indiana. During the proceedings, the company shed $500 million in debt and Trump turned over a sizeable amount of the company to bond holders. However, Trump remained the majority shareholder to stay in control. Trump’s most recent bankruptcy occurred in 2009 for Trump Entertainment Resorts after the company missed a bond payment of $53.1 million. This marked the end of Trump’s reign as an Atlantic City casino owner. He resigned from the board and gave up his stake in the company, though his name remained on some of the casinos. In 2014, the Trump Taj Mahal and Trump Plaza filed for bankruptcy once again. Trump responded by suing to have his name removed in order to solidify the fact that he no longer had a connection to the failing casinos. Trump stated during the debate that he’s glad he got out of the Atlantic City casino business when he did, “I had the good sense, and I’ve gotten a lot of credit in the financial pages, seven years ago I left Atlantic City before it totally cratered.” Trump’s departure from that business hasn’t seemed to hurt him as he developed his career in different ways, and his many visits to bankruptcy court didn’t hold him back at all. No matter what your opinion on Trump as a person, it’s hard not to admire his ability to move forward after experiencing huge setbacks. He’s a good example of how filing for Chapter 11 bankruptcy doesn’t mean the end of your career. Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC is a debt relief agency pursuant to 11 U.S.C. 528(a)(4) and assists individuals, families, and businesses file for bankruptcy relief under the Bankruptcy Code. This website is a communication under California Rule of Professional Conduct 1-400. No legal relationship is created by the use of this website and no legal advice is provided. No guarantee or warranty is provided that your case or matter will achieve any particular result and testimonials and endorsements provided on this site do not constitute a guarantee, warranty, or prediction about your matter or case. This communication is made on behalf of Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC and DANIEL A. HIGSON, State Bar No. 71212 is responsible for its contents. All information contained on this website may be factually substantiated by a credible source, including data from the United States Public Access to Court Electronic Records (PACER) system. Detailed data and information is available on request. Bankruptcy is stressful and discouraging, but there are plenty of examples of people bouncing back and succeeding after filing. One such person was Henry Ford, the famous industrialist who founded Ford Motor Company.
Henry Ford was born in Dearborn, Michigan in 1863. He worked as a machinist for several years and was hired by the Edison Illuminating Company in 1891. He started working on internal combustion engines, and built his first full vehicle, the Quadricycle, in 1896. Convinced that automobiles were the way of the future and backed by several investors, he left his job to start the Detroit Automobile Company in 1899. Although Ford was a skilled engineer, he didn’t know much about business or marketing. His first product was lower in quality and higher in price than he wanted, and he didn’t focus enough on explaining the value of his vehicle. Failing to capture the public’s attention, Henry Ford filed for bankruptcy and had to leave his company. Undeterred, Henry Ford saw bankruptcy as a clean slate and continued with his passion. This time he had more experience under his belt and could correct the mistakes he made with Detroit Automobile Company. He founded the Ford Automobile Company in 1903, and captured everyone’s attention by breaking the land speed record with his invention. Ford forged on by creating the new simple, sturdy, cheap Model T design. He also utilized the famous moving assembly line that increased productivity immensely. You probably won’t end up founding a revolutionary car company, but bankruptcy does not have to be the end of your career. Learn from your mistakes, and look towards the future with optimism. Henry Ford’s first company fell apart and disappointed him and his financial backers. But he landed on his feet, and so can you. To find out more about bankruptcy and whether it might be the right decision for you feel free to call Dan Higson at Hathaway Law. 805-644-7111 danhigsonattorney.com Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC is a debt relief agency pursuant to 11 U.S.C. 528(a)(4) and assists individuals, families, and businesses file for bankruptcy relief under the Bankruptcy Code. This website is a communication under California Rule of Professional Conduct 1-400. No legal relationship is created by the use of this website and no legal advice is provided. No guarantee or warranty is provided that your case or matter will achieve any particular result and testimonials and endorsements provided on this site do not constitute a guarantee, warranty, or prediction about your matter or case. This communication is made on behalf of Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC and DANIEL A. HIGSON, State Bar No. 71212 is responsible for its contents. All information contained on this website may be factually substantiated by a credible source, including data from the United States Public Access to Court Electronic Records (PACER) system. Detailed data and information is available on request. Filing for bankruptcy during a divorce is a stressful situation made even worse when you have to do both at the same time! It’s crucial to understand how these processes will affect each other now and in the future. Here are some frequently asked questions about this situation and suggested solutions:
Should I file for bankruptcy before or after my divorce? It is more beneficial to file for bankruptcy first. The initial fees are identical if you file for joint or individual bankruptcy, but in the long run you can save time and money in court fees by filing together rather than separately. Also, filing for bankruptcy beforehand may reduce some divorce costs. However, you have to take into consideration how well you and your spouse will work together during the bankruptcy proceedings if you are undergoing an emotional split. Which type of bankruptcy should I choose? Whether you choose Chapter 7 or Chapter 13 bankruptcy depends on your financial situation, and your marital status can affect eligibility for one or the other. Chapter 7 bankruptcy discharges unsecured debts (debts that have no collateral, such as credit cards and medical bills). The removal of such debts can be accomplished within a matter of months. However, if you file for Chapter 7 before your divorce, it’s possible that your combined finances might put you over the line for eligibility. If this is a problem, it would be best to file Chapter 7 after your divorce so your ex-spouse’s income does not affect the process. Chapter 13 bankruptcy differs greatly from Chapter 7. It takes longer to complete (between 3-5 years), and you are expected to adhere to a plan of repayment instead of having the majority of debt discharged. For these reasons, you should wait until after your divorce is complete before initiating Chapter 13 bankruptcy since the divorce would (hopefully!) be long over before the repayment plan is complete. How are our debts and properties handled in married versus single households? Each state has different rules governing which properties can be exempted during bankruptcy. Some areas may allow you to double your exemptions when filing for joint bankruptcy. However, if you don’t have enough property that qualifies for exemption, filing separately would probably be the better option. As long as you are not at each other’s throats, it can be easier to pay off debts together rather than individually. It takes time in court to allocate debts to each spouse. Also, creditors may still consider both of you accountable for the debt even after the divorce goes through. For example, if you have a joint credit card with accrued debt that is allocated to your spouse during the divorce, the credit card company will nevertheless consider you responsible if that person does not handle it. If you are still confused about how your bankruptcy and divorce will affect each other, call us at Hathaway Law today. We would be happy to help you navigate the confusing paperwork and other issues that arise during these stressful procedures. Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC is a debt relief agency pursuant to 11 U.S.C. 528(a)(4) and assists individuals, families, and businesses file for bankruptcy relief under the Bankruptcy Code. This website is a communication under California Rule of Professional Conduct 1-400. No legal relationship is created by the use of this website and no legal advice is provided. No guarantee or warranty is provided that your case or matter will achieve any particular result and testimonials and endorsements provided on this site do not constitute a guarantee, warranty, or prediction about your matter or case. This communication is made on behalf of Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC and DANIEL A. HIGSON, State Bar No. 71212 is responsible for its contents. All information contained on this website may be factually substantiated by a credible source, including data from the United States Public Access to Court Electronic Records (PACER) system. Detailed data and information is available on request. |
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January 2016
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