May 25, 2006
According to Mohave Daily News: Business, bankruptcy filings in Arizona dropped like a rock in the first four months of the year.
From January through April 2005, 10,592 filings were reported by the U.S. Bankruptcy Court of Arizona. The same period this year saw only 1,777 cases, of which 1,374 were so-called ‘‘Chapter 7'' liquidation filings.
‘‘For April, we're almost 84 percent below what we had for the same month last year,'' said Terrence Miller, clerk of the U.S. Bankruptcy Court of Arizona.
‘‘Year to date, we're about 83 percent below. We had that large upsurge right before the new law took effect . . . so we're finishing up working through all those cases.''
With figures like 83 percent below previously levels, you will soon see courts laying off personnel. The courts are already on tight budgets that are tied to case loads.
Watch the chapter 13 trustee's office, notrious for their large staffs, to also start laying people off right and left.
May 22, 2006
Most bankruptcy info seems to come from the U.S., probably because the U.S. has the most sophisticated (and complicated after the new law was passed) bankruptcy law in the world.
Here is an interesting article about bankruptcy in the U.K.: One million face bankruptcy in UK – Irna
Some of the figures seem to parallel U.S. filings,
- $18,000 average unsecured debt
- low interest rates and easy credit entice debtors
- most U.K. debtors site overspending as the basis for excess debt
- Unemployment, redundancy, illness, divorce, leaving work to have a child and loss of overtime were also listed as factors
May 18, 2006
Pennsylvania filings are increasing and this could be part of a national trend.
“There was a lot of confusion about whether bankruptcy would go away.
People are now starting to realize that bankruptcy is still an option
to those under extreme financial duress, said bankruptcy attorney
Stephan Nikoloff, of Legal Helpers, a law firm specializing in consumer
bankruptcy. “The majority of people who could file for bankruptcy prior
to the law change can still file under the new law.”
This only makes sense as the down cycle couldn’t last that long, at least that’s what most bankruptcy lawyers have been theorizing.
There were two ways to look at it really
- Everybody filed pre-new law
- Everybody is afraid to file now
Both reasons will work themselves out and most of the pre-new law levels will probably return, one would think. Once the lawyers tweak everything out, the new bankruptcy law will be a lot thinner and easier to work with anyway.
May 16, 2006
The IRS has revoked the tax-exempt status of many credit counseling agencies after audits of the companies.
The real world of credit-counseling according to the article goes something like this:
"We were seeing almost boiler rooms selling these plans," said Steven Miller, commissioner of tax-exempt and government entities at the IRS, in a telephone interview.
"If you weren't qualifying for a debt-management plan, they were hanging up on you. Even if you did qualify, they made no real attempt in many instances [to ascertain] whether you were better off in a debt-management plan," he said.
And, as part of their tax-exempt status, these organizations are supposed to provide education, but that's not what was happening, Miller said. "These organizations are supposed to talk to people and do some education about how to get their credit lives in order," he said. "There was too much salesmanship and sales of debt-management programs, and not enough education."
This crackdown on counseling agencies comes at a time when consumers seeking to file bankruptcy are now forced to complete a credit-counseling session, under the rules of the new bankruptcy law that went into effect in October.
Check The Florida Bankruptcy Law Blog: Insurance Proceeds Received After Filing Bankruptcy for a great explanation of the rule about receipt of insurance proceeds after filing.
The point of the story is that insurance proceeds received within the initial months after bankruptcy filing are part of the bankruptcy estate under the law. This provision of the law is designed, in some part, to prohibit someone from filing bankruptcy when they anticipate a recovery from an estate so as to deprive their creditors of claims they might otherwise have when the debtor received said proceeds.
Rember also that the proceeds from the estate can be exempted under relevant exemption codes.
Bankruptcy and Restructuring Blog has a rundown on the recent 9th Circuit opinion soldifying the Bankruptcy Trustees exclusive right to assert legal claims on behalf of the bankruptcy estate.
“The Ninth Circuit noted that Bankruptcy Code section 323
gives the trustee the capacity to sue on behalf of the estate. The
Court further acknowledged that, under some circumstances, a trustee
may authorize others to bring suit on the estate’s behalf. However, the
Ninth Circuit held that the right to bring suit belongs to the trustee
in the first instance, not creditors.”
From the National Association of Consumer Bankruptcy Attorneys, a lawsuit that many lawyers have heard alot about and waited along time to see has finally been filed. Word has been circulating in the bankruptcy bar about the lawsuit filed today by NACBA and the text of the case looks promising.
From the NACBA website:
NACBA, along with the Connecticut Bar Association, has filed suit in the Connecticut federal court to have the "debt relief agency" provisions of the new bankruptcy law held unconstitutional if they are applied to attorneys. The suit seeks a preliminary injunction prohibiting their application to attorneys, including all NACBA members.