A Michigan judge declared that Detroit’s Chapter 9 bankruptcy filing violated the state’s constitution and ordered Governor Rick Snyder to withdraw it.

Circuit Court Judge Rosemarie E. Aquilina in Lansing today criticized Snyder, a Republican, for rushing the filing into court yesterday before she could rule on a bid by city workers and their pension funds to consider an emergency request to block the filing.

“I’m finding the actions that were taken in filing bankruptcy as overreaching and unconstitutional,” she said.

She ordered the governor to direct Detroit emergency manager Kevyn Orr to immediately withdraw the bankruptcy petition. She also said he cannot authorize further filings that would impair or diminish public pension benefits.

Attorney General Bill Schuette applied for permission to appeal the decisions. He also filed a motion to suspend Aquilina’s rulings pending appeal, Joy Yearout, a spokeswoman for the attorney general, said in an e-mailed statement.

Kenneth Klee, the bankruptcy lawyer who spearheaded the bankruptcy restructuring of Jefferson County, Alabama, said a state judge can’t force Detroit out of federal bankruptcy, even if Snyder agrees to try to withdraw the petition.

Once Detroit city filed the bankruptcy petition, it came under federal jurisdiction and the case cannot be withdrawn, even by Snyder, said Klee, of Klee Tuchin Bogdanoff & Stern LLP in Los Angeles. A federal judge would have to agree to dismiss the case, according to Klee.

‘Doesn’t Matter’

“If the governor changes his mind, it doesn’t matter,” he said. “Not only can’t she do that, but her order may be in contempt of a federal court, and a federal judge can put her in jail.”

Current and retired city workers had asked Aquilina to issue a temporary restraining order to keep the city of Detroit from filing for bankruptcy. The bankruptcy petition was filed minutes before the judge was able to rule.

“The plaintiffs should not have been blindsided in this court,” said Bill Wertheimer, a lawyer representing some of the plaintiffs.

Brian Devlin, a Michigan assistant attorney general, argued that no harm has yet been done to the plaintiffs.

Aquilina said harm was “imminent.”

“You understand bankruptcy court,” she said. “That’s why you ran there yesterday, not slowly, but in your running shoes.”

The bankruptcy case is City of Detroit, 13-bk-53846, U.S. Bankruptcy Court, Eastern District of Michigan (Detroit).

NEW YORK (CNNMoney)

7/18/2013

Detroit filed for bankruptcy Thursday afternoon, becoming the nation's largest public sector bankruptcy. The move could slash pension benefits to city workers and retirees, and leave investors holding the city's debt with only pennies on the dollar

Emergency Manager Kevyn Orr, appointed by Michigan Gov. Rick Snyder to oversee the city's finances, had been holding meetings with various creditors for the last five weeks in an effort to shed debt that the city can no longer afford. But despite the fact that some banks agreed to take reduced payments, Orr sought and received permission from Snyder to file.

Pension funds and retirees who fear deep cuts in promised benefits had filed suits to try to block a filing. Thursday's filing came before a hearing on the suits that was set for Monday.

Orr already halted payments on about $2 billion in debt last month, saying the city needed to preserve its dwindling supply of cash. His reorganization plan calls for cutting $11.5 billion in unsecured debt -- including pensions, health care funds and loans not backed by assets -- down to $2 billion. That would mean that investors and retirees would receive an average of just 17% of what they are owed. Specific plans for the cuts are unknown at this time.

Related: City of Detroit is financially 'insolvent'

Cutting retiree's pensions in a municipal bankruptcy has never been done before, said Michael Sweet, a California bankruptcy attorney who is an expert in public sector bankruptcies.

"It's relatively easy to blow off a creditor. It's much harder when it's people who are the fabric of your community who you'll need going forward," he said. "You need a police force, you need a fire department. You're saying [to them] you're not worth what you were previously promised."

Sweet said case law on whether pensions can be cut this way is very limited, and it could take years for a court fight over pension cuts to work its way to the U.S. Supreme Court. Given the poor state of funding for many public sector pension funds nationwide, "it's a big enough question, that (the Supreme Court) is where it likely will have to go," he said.

Related: Detroit halts debt payments, plans pension cuts

When employees of a bankrupt business lose their promised pensions, the Pension Benefit Guarantee Corp. steps in and provides a minimal level of benefits to the retirees. But that federal agency doesn't back pensions in the pubic sector.

Snyder spokeswoman Sara Wurfel said the decision to file for bankruptcy came after careful deliberation.

"This has been a huge problem for decades and it's come to a crisis point," she said. "The emergency manager tried to work with all the creditors, including pensioners."

Retirees and city employees say they can't accept cuts in their pension benefits.

"How am I supposed to live without my pension?" said David Sole, 65, after a protest in Detroit last month. Sole retired from the city's water department in January after 22 years.

Investors say the bankruptcy will make it more difficult for cities and towns everywhere to raise the money they need to build bridges, schools and other infrastructure. It will also hurt municipal bonds held by individual investors. There are more than $1 trillion worth of these general obligation bonds issued by local governments that are at risk said Peter Hayes, head of municipal bonds at BlackRock. He said there will be a ripple effect nationwide.

Orr said that the city needs to cut debt in order to restore services and lower costs, such as taxes and insurance, that he says have chased businesses and residents out of the city.

Detroit's population has fallen 28% since 2000. The unemployment rate, while down from a peak of 27.8% in the summer of 2009 -- when General Motors (GM, Fortune 500) and Chrysler Group were going through their own bankruptcies -- is still at 16.3%, nearly twice Michigan's statewide average.

While the auto industry has enjoyed a resurgence with strong car sales and profits, GM, Ford Motor (F, Fortune 500), Chrysler Group and parts manufacturers have been on a hiring binge, most of the industry's Michigan plants lay outside of city limits.

-- CNN's Poppy Harlow contributed to this report. 

Wall Street Banks Get Lower Rates Than Student Loans AND Can Bankrupt Their Loans From The Government…Fair?

By: Bankruptcy Law Network

Bankruptcy remains a source of financial relief for most borrowers.  Most debts are discharged in bankruptcy and folks receive a “fresh start”.   However, there is one huge exception that is not discharged automatically in any bankruptcy.   Student loans. both government and private loans, are not discharged in bankruptcy without effort.    Student loans are generally not discharged in bankruptcy cases unless the student can prove that the loans cannot be repaid without undue hardship.  Providing undue hardship would seem to be easy in a bankruptcy case — after all, bankruptcy means broke, right?   Unfortunately, bankrupt student loan debtors who bring their cases before the court find that bankruptcy courts rarely find that loans should be discharged for undue hardship.  It’s a tough standard to meet.    Here at Bankruptcy Law Network, our members have discussed the problem of student loan surviving bankruptcy many times, in articles  by Kent Anderson, Craig Andresen, Jonathan Ginsberg.  While there have been attempts to pass laws which would change how the government deals with student loans, post bankruptcy, student loans generally continue to cause problems for most debtors.   Since bankruptcy generally doesn’t get discharge student loans, maybe there is another way to handle the financial stress…meet Elizabeth Warren.

Before being elected as the Democratic Senator from Massechusetts, Elizabeth Warren served as the interim potential head of the Consumer Financial Protection Bureau but her permanent appointment was blocked by partisan politics.   Undeterred, Elizabeth Warren ran for Senate shortly thereafter.   Warren now serves on the Senate Banking Committee.  Under her leadership, touch questions have been asked of those who regulate the banking industry.   For example, she asked those regulators appearing before the Senate Banking Committee a question they found hard to answer:   when was the last time a Wall Street bank was taken to trial for violations of banking regulations.  (The answer was  never, by the way.)

Now, Elizabeth Warren has introduced her first piece of legislation:  “The Bank on Students Loan Fairness Act“.   Ms. Warren proposes a radical change:   to give individuals the same interest rate that the big Wall Street banks obtain, an interest rate of about .75% on loans they obtain from the government.   The interest rate for Stafford (government backed) student loans is currently set at 3.4% and is set to double to 6.8 percent in July.

As Warren explains, this student loan problem is a quiet but growing problem.   She explains that taxpayers are investing in the big banks and that taxpayers should invest in our students.    America should not be “drowning our students in debt while we give a great deal to the banks.”   She points out that economists have stated that defaulted student debt poises a problem and barrier to the recovery of our economy.    She concluded with a call to action and a reminder that students have only their voices, not lobbyists, to ask Congress for equal treatment.

Why should our government make it so easy for Wall Street to skip out on debt while requiring students, our future, to jump hurdles and hire attorneys to obtain financial relief?

Ms. Warren, a former Harvard law professor, understands the financial pressure faced by most Americans as she came from a working-class background, becoming a waitress at age 13 (after beginning as a babysitter at age 9).   Ms. Warren has authored 9 books, including two best sellers. 

Benefits of Bankruptcy Discharge

A bankruptcy discharge is one of the primary reasons that a person files for bankruptcy protection.  We all should know this, but do we really know what the bankruptcy discharge allows us to do?  This is the question that really needs to be answered.  First, we need to discuss what the bankruptcy discharge is and then we can speak about the benefits.

The discharge can be defined in lawyer terms or in a way that non-lawyers can understand.  A legal definition of the bankruptcy discharge is that the discharge creates a statutory permanent injunction against the collection of all dischargeable debts of the debtor.  In non-legal terminology, the discharge prevents creditors, whose debts were properly included in the bankruptcy and legally discharged, from taking any or all steps to collect on their debt.

But the question still remains:  What are the real benefits of the bankruptcy discharge?  When a debtor obtains a bankruptcy discharge, it will take some time before their credit reports will be updated.  It takes Equifax, Experian and TransUnion approximately ninety (90) days to make the corrections to the tradelines.

After the tradelines are corrected, you should notice a change in your credit score because your debt to income ratio has changed.  It should be no surprise to anyone that after your bankruptcy discharges all or most of your debts that your debt to income ratio becomes more favorable.

The reason that you are working on your debt to income ratio is three-fold.  First, if you are ever going to purchase another home or car, you will want to get the best interest rate and the most favorable loan terms.

Second, if you have to purchase insurance, your debt to income ratio may save you some money; and Third, if you have debts that you carried through the bankruptcy, you will want to make sure that they are being properly reported by the credit reporting agencies so that you will not encounter any problems later. I’ve seen people ignore their credit reports for up to ten years after the bankruptcy and then wonder why they are having trouble getting insurance or a car loan.

Here is how you can make it even better.

First: Set aside a time where you can review your finances on a weekly basis. this may take 5 – 10 minutes per week. Know which debts you owe and calendar the payments. For example, you know that your car payment and rent or mortgage are due on a certain date. After bankruptcy, it is critical that those debt be paid timely. Remember that you are rebuilding your credit and that any stumbles after bankruptcy are going to be with you for a long time.

Second: Make a list of any debts that survived the bankruptcy and create a plan of action to pay those debts off. For example, you may owe the IRS or some student loans. Make a plan to start paying those debts down. I don’t care if it is $10 a month. Create a plan and stick to it. If it makes more sense to pay off the car first, then great, focus on the car payment until it is gone.

Third: Make a plan to revisit your credit reports annually. In the past I’ve spoken about pulling a credit report every 4 months. The reason I say this is because you get one free credit report each year from each of the three biggest credit reporting companies. Use the free pulls to your advantage. Check them thoroughly to make sure everything is being reported properly. This is only once every four months, so it will not take a huge chunk of your time or energy. Look at each and every detail of the credit report. I always ask myself: Would I loan this guy money knowing xyz?

Fourth: You may want to get a secured credit card or gas station credit card. Tread lightly here. If you do not think you will be able to control yourself, then do not even apply for a credit card, stick with your debit card. However, if you do decide that this step is necessary, do your homework and make sure that you are making the proper decision on the right credit card for your needs.

Fifth: Be extra careful this time by creating an emergency fund. This way, if you ever run into an unexpected problem, you can tap the emergency fund and save your credit report from being blemished.

Doctors driven to bankruptcy

By Parija Kavilanz @CNNMoney April 8, 2013

Chapter 11 bankruptcy filings by physician practices have spiked recently, noted Bobby Guy, co-chair of the American Bankruptcy Institute's health care committee, who tracks bankruptcy trends tied to distress

ed businesses. Guy said there were at least eight filings in recent weeks, which he said was "very unusual."

Five years ago, Plantation, Fla.-based bankruptcy attorney David Langley didn't have a single doctor as a client. Since then he's handled at least six bankruptcy cases involving doctors. Two current clients -- an orthopedic surgeon and an OB/GYN -- also are in bankruptcy.

None of his physician clients had malpractice lawsuits that landed them in dire financial straits. All are "top-notch doctors," he said.

The weak economy has taken a toll on doctors' revenue, as consumers cut back on office visits and lucrative elective procedures, said Guy, a bankruptcy attorney in Nashville with Frost Brown Todd LLC.

Doctors also blame shrinking insurance reimbursements, changing regulations, and the rising costs of malpractice insurance, drugs and other business necessities for making it harder to keep their practices afloat.

Related Story: Doctors going broke

Oncologist Dr. Dennis Morgan had a profitable solo practice in Enfield, Conn., for years. Revenues began to fall, he said, when reimbursements for treatment and drugs to oncologists started shrinking. He made cutbacks, but he began having trouble meeting expenses, and his business debt grew. Critical chemotherapy drug and medical supplies providers "eventually cut me off," Morgan said.

In June 2011, his practice, in a medically underserved area, filed for bankruptcy. It had hundreds of chemotherapy patients at the time.

For the next two years, his role became "that of a captain of a sinking ship managing the allocation of life boats until rescue arrived," he said. He redirected patients to other doctors and area hospitals. Early last year, he stopped practicing medicine.

Having a cancer practice close can be "debilitating" to a community, said Morgan. "If you have to travel one or two hours to get treatment and you have no one to go with you, it becomes a matter of getting care or not getting care," he said.

Liberty Medical Files for Chapter 11 Bankruptcy

Liberty Medical Supply Inc. and affiliates that provide products and services for people with diabetes and other ailments filed for Chapter 11 bankruptcy court protection amid pressure from creditors.

The Port St. Lucie, Florida-based company listed assets and debts of as much as $500 million each in papers filed today in Wilmington, Delaware.

“Several unexpected events” including disputes with tax authorities and the Center for Medicare and Medicaid Services, led to the filing, said Frank A. Harvey, Liberty chief executive officer, in an e-mailed statement.

Bankruptcy petitions were also filed by Polymedica Corp., National Diabetic Medical Supply LLC, Liberty Healthcare Group Inc. and Liberty Healthcare Pharmacy of Nevada LLC.

Among the largest unsecured creditors listed in court papers were CGS Administrators of Nashville, Tennessee, owed $137 million, and Abbott Laboratories of Abbott Park, Illinois, owed more than $5 million.

“Liberty continues to focus on our critical mission to positively impact the lives of our patients” by helping to manage their health, Harvey said.

The case is In re Liberty Medical Supply Inc., 13-10268, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Irvine-based power wholesaler files Chapter 11

The Associated Press

Edison Mission says the bankruptcy won't affect Midwest Generation's operations and that there are no plans for layoffs among its roughly 960 employees.

The company blames its financial problems on high fuel costs and other factors, such as retrofits needed at coal plants.

Midwest Generation operates plants in the Illinois cities of Joliet, Pekin, Waukegan and Romeoville.

Through its subsidiaries, Edison Mission Energy, owned by the California utility Edison International, owns or leases more than 40 power plants in California, Pennsylvania, Iowa, Illinois and other states.

Company president Pedro Pizarro said the companies hope to emerge from bankruptcy as a separate company independent of Edison International.

"This is an important first step in the process to reduce our debt, enhance our liquidity profile and position EME for continued operation and future success while preserving our ability to generate power safely and reliably at our electric facilities across the country," he said in a printed news release.

"Throughout this process, business operations will continue in the normal course," the news release continued, "and we will continue to support our customers, suppliers and employees."

California Bankruptcy Exemptions Increase as of January 2013

Some bankruptcy exemptions are higher in California as a result of California Assembly Bill AB-929. This bill was approved by the governor and filed with the Secretary of State on September 27, 2012. This means that more of your property can be protected when you file for bankruptcy. California has two exemption statutes. The first exemption statute has a generous wild card exemption, Section 703.140 of the Code of Civil Procedure, and the second exemption statute has a generous homestead exemption, Section 704.730 of the Code of Civil Procedure. Your bankruptcy attorney cannot use both in a bankruptcy petition. California has opted out of using the federal exemption statutes so those are unavailable for people filing for bankruptcy in California.

Here are some of the changes in the exemption statutes as of January 1, 2013:

Section 703.140 of the Code of Civil Procedure:

• $24,060 in homestead or burial plot ($22,075 previously)
• $25,340 wildcard exemption. This consists of $1,280 plus any unused portion of the $24,060 homestead or burial plot exemption. ($23,250 previously)
• $4,800 in one or more motor vehicles ($3,525 for ONE motor vehicle previously)
• $600 in any single household item ($550 previously)
• $7,175 professional books or tools of trade ($2,200 previously)
• $12,860 dividend or interest under unmatured life insurance contract ($11,800 previously)
• $24,060 personal injury payments ($22,075 previously but this did not include pain and suffering compensation)

Section 704.730 of the Code of Civil Procedure:

Homestead exemptions provided to a homeowner would be one of the following:
1) $75,000 unless you are a person described in (2) or (3) below.
2) $100,000 if you are a member of a family unit where one or more members of the family do not have an interest in the homestead or whose only interest is a community property interest
3) $175,000 ($150,000 previously) if you are:
a. 65 years of age or older
b. physically or mentally disabled and as a result cannot work
c. 55 years or older with gross annual income of not more than $25,000 (single) or $35,000 (married) and there is an attempted involuntary sale ($15,000 if single and $20,000 if married previously)

Additionally, on April 1, 2013, (and every three years thereafter) the Judicial Council is required to submit adjusted homestead exemptions based on the change in the annual California Consumer Price Index to the Legislature. The increases will not be in effect until they are approved by the Legislature. This will tie the homestead exemptions to inflation and the rising cost of home ownership.

Atari’s U.S. Operations File for Chapter 11 Bankruptcy

Atari SA’s U.S.-based video-game- making businesses filed for bankruptcy protection in Manhattan with the intention of separating from the unprofitable French parent and seeking independent funding. 

New York-based Atari Inc., maker of video games “Pong” and “Asteroids,” as well as affiliates Atari Interactive Inc., Humongous Inc. and California U.S. Holdings Inc., asked to be jointly administered in filings yesterday in U.S. Bankruptcy Court, according to a statement 

Within the next 90 to 120 days, the companies expect to effectuate a sale of all, or substantially all, of their assets,” in a free and clear sale under the U.S. bankruptcy laws, or confirm reorganization plans that “accomplish substantially the same result,” according to the statement.

Atari was founded in 1972 and became a pioneer in arcade and video games. It now lags behind game-making giants such as Activision Blizzard Inc. (ATVI), the world’s largest by sales, and Electronic Arts Inc. (EA) Atari owns or manages more than 200 brands, including “Centipede,” “Missile Command” and “Rollercoaster Tycoon.” Its games can be played online, on mobile devices and on consoles from Microsoft Corp. (MSFT), Sony Corp. (6758) and Nintendo Co., according to its website. 

‘Significant Loss’ 

The move to separate the U.S. business comes after the parent company Atari said in December it was strained for cash. The French parent, which hasn’t made a profit since 1999 despite asset sales and restructuring, forecast a “significant loss” in 2012-2013, and said it would weigh all means of raising cash and had been talking to potential investors. 

According to its Chapter 11 petition, Atari owes $10 million to $50 million to at least 200 creditors and possibly as many as 999. It reported assets of $1 million to $10 million. 

Related content: The Evolution of the Video Game

 “The Chapter 11 process constitutes the most strategic option for Atari’s U.S. operations, as they look to preserve their inherent value and unlock revenue potential unrealized while under the control of Atari SA (ATA),” according to yesterday’s statement. “During this period, the company expects to conduct its normal business operations.”

 The corporate parent issued a separate, later statement saying it was seeking related relief under the laws of France.

Shares Fall

 Atari fell as much as 5.6 percent to 84 centimes in Paris trading before closing yesterday at 86 centimes, down nearly 3.4 percent. The company has a market value of about 25.4 million euros ($33.8 million), a drop of about half over the past year. 

The U.S. companies are seeking approval to obtain $5.25 million in debtor-in-possession financing from funds managed by New York-based Tenor Capital Management, according to the earlier statement. 

Atari also requested court permission to pay pre-filing wages and benefits to its 48 employees, four of whom are paid by the hour, the remainder of whom are salaried. Average gross semi-monthly payroll is $258,600, according to court documents. As of its bankruptcy, about $90,000 of those wages and salaries remain unpaid, according to the filing. 

The company also asked for permission to pay prepetition claims of “critical” vendors and for other interim relief. 

The case is In re Atari Inc., 13-bk-10176, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

4th Bankruptcy In Perry's Tech Fund Adds To Losses 

U.S. BUSINESS BANKRUPTCIES FALL 22% SO FAR IN 2012

San Bernardino votes to file for bankruptcy protection 

 L.A. Times

7/10/12

By: Phil Willon in San Bernardino

The San Bernardino City Council votes to file for bankruptcy. Facing a $45-million budget shortfall and the prospect of not being able to pay city workers, the panel Tuesday voted to file municipal bankruptcy, the third California city to do so in recent weeks. 

The vote came shortly after the interim city manager recommended seeking bankruptcy protection, saying the city may not be able to make payroll over the next three months. "We have an immediate cash flow issue," Andrea Miller told the mayor and seven-member council. 

The dire fiscal situation remains even after the city negotiated $10 million in concessions from employees and slashed the workforce by 20% over the last four years. 

If San Bernardino declares bankruptcy, it would be the third California city to do so in recent weeks, joining Stockton and Mammoth Lakes. The council called special back-to-back budget meetings Tuesday and Wednesday, which are expected to attract a packed house at City Hall.

Top 15 Lies about filing for Bankruptcy..... Lie #6: Filing Bankruptcy Kills Your Credit For 10 Years

by Brett Weiss, Maryland Bankruptcy Attorney

June 7, 2012

A common misconception about bankruptcy is that it completely destroys your credit for 10 years. This is simply not true.

Here, two completely different concepts are being confused with each other. The fact that bankruptcy is reported on your credit report for 10 years (7 years for Chapter 13) is getting mixed up with the effect that reporting will have on your credit. Just because something is reported on your credit report does NOT necessarily mean it will have a negative effect on your credit standing. In fact, many of my clients credit scores actually improve after they file!

Heres why. By the time you need to make an appointment to see a bankruptcy attorney, your credit is usually pretty trashed, messed up and maxed out. This being the case, you have no credit for bankruptcy to hurt. As I usually tell clients, You cant wet a river.

Even if you have excellent credit when you file, as some of my clients do, the longer that passes since the filing date, the less important the filing itself is to potential lenders. Of far more importance is what have you done for me latelythat is, what your recent post-bankruptcy income and credit shows about your ability to pay.

This is why, as I mentioned in Myth #5, in my experience, if you have not re-established good credit within two to four years after you receive your bankruptcy discharge, most likely it has nothing to do with the fact that you filed bankruptcyand it certainly has absolutely nothing to do with the fact that your credit history still shows an old bankruptcy. Instead, it is likely to do with your experiences after you file for bankruptcymissed payments on new debt or a post-bankruptcy payment default are the two biggest killers of post-bankruptcy credit.

Stockton moves another step closer to bankruptcy

L.A. Times

June 6, 2012|12:06 pm

The city of Stockton moved a step closer to becoming the nation's largest city to declare bankruptcy, authorizing the city manager to file for Chapter 9 protection from creditors.

A 6-1 vote after a tense 4 1/2-hour public meeting Tuesday directed City Manager Bob Deis to file if the current mediation process fails. On March 27, Stockton stopped payments to creditors and entered a confidential mediation process under AB 506, a California law designed to slow municipal bankruptcies by forcing all parties to the table. Under this law, the bargaining period has a 60-day limit, unless all parties agree to extend it for another 30 days.

The city and its creditors agreed to extend negotiations through June 25.

Deis said he wants to be ready to go to bankruptcy court the next day if talks fail.

A statement released by the city described the financial situation as "dire" and noted that the city will face a $26-million deficit by July 1.

The port city of 290,000 has one of the highest home-foreclosure rates in the nation, as well as a high rate of violent crime. City Hall also is in an ongoing struggle with police and city workers unions over pensions. It has already cut many city services and is selling off properties such as city parking garages.

"It's time to stop the chaos and degradation of this organization and fix the structural imbalance,"

Deis said in a statement. "We have to start the road to recovery."

Bankruptcy lawyers resist scrutiny over fees

By David Ingram | Reuters

06/04/2012

WASHINGTON (Reuters) - The bankruptcy lawyers who handle the biggest U.S. corporate restructurings responded with hostility on Monday to new scrutiny of their fees, which can reach hundreds of millions of dollars at the expense of creditors.

The lawyers told officials of the U.S. Justice Department they do not want to keep a budget, they do not want to disclose details of their billing practices and they do not want to justify expenses under $500.

The lawyers tried to make their case on the 7th floor of Washington's Justice Department at a rare public meeting called to consider whether bankruptcy fees are inflated, unjustified or wasteful.

The airing of ideas took place amid tales of limousine rides and clothing put on expense accounts, and in the face of questions about what exactly lawyers do to bill at rates up to and above $1,000 an hour.

In one recent example, during the two-and-a-half-year restructuring of Lehman Brothers, payments to the law firm Weil Gotshal & Manges totaled $383 million, according to a securities filing in March.

Legal fees are at issue also in the bankruptcy of MF Global Holdings Inc, whose estate has paid $17 million to lawyers in four months, according to court filings on Monday.

Bankruptcy lawyers bill at higher rates than lawyers in most other specialties, although the reason is in dispute. The top billers say the market values their experience and knowledge in restructuring companies such as Chrysler Group LLC. Critics say it is because managers of bankrupt companies are less aggressive than other clients in asking for discounts.

The Justice Department's U.S. Trustee Program is considering changes designed to impose what it considers financial discipline.

INACCURATE DATA

At Monday's meeting, lawyer Richard Levin said the data that the U.S. Trustee Program wanted to collect about hourly rates would be useless. He said legal billing records often were inaccurate because he and colleagues forgot to write down time they spent on cases.

"Lawyers are notoriously bad at administrative tasks, including putting data in properly," said Levin, a partner at Cravath, Swaine & Moore in New York and vice chairman of trade group the National Bankruptcy Conference.

In bankruptcy cases, lawyers' fees are at the mercy of the bankruptcy courts. Lawyers submit applications for compensation and objections may come from creditors, many of whom lose out in a bankruptcy, or from trustees, who are federal officials.

The final decision on fees is up to a bankruptcy judge, guided by what U.S. law says is "necessary" and "reasonable."

The U.S. Trustee Program wants to know whether law firms inflate their rates in bankruptcy cases for example, by using more lawyers than necessary, or by dragging their feet knowing they are unlikely to be challenged by the court.

"It cannot possibly be, can it, that everyone works through budgets except bankruptcy lawyers?" asked Clifford White, director of the Executive Office of U.S. Trustees.

Damian Schaible, one of five private lawyers who answered questions in person from White and his staff, said the process of budgeting was often useless, especially in the context of a legal team working on an unpredictable bankruptcy.

"How can anyone budget in the real world what they're going to spend?" asked Schaible, a partner at Davis Polk & Wardwell in New York, dismissing budgets also in personal bankruptcies.

LARGE FIRMS' DNA

Big law firms, which can throw scores of lawyers at a single case, cannot help but splurge on a major bankruptcy, said Albert Togut, managing partner of a boutique law firm that specializes in bankruptcy.

"It's in their DNA that, when they approach a project, they bring every resource at their disposal to the project," he said.

He urged the trustee staff to make a change that would encourage greater use of small, specialized law firms.

There has been a disproportionate number of major bankruptcy cases in recent years including Lehman, General Motors, Washington Mutual and the proposed new scrutiny from the U.S. Trustee Program is aimed at big cases, those with combined assets and liabilities of $50 million or more.

But there is disagreement even on that threshold. A group of 118 law firms opposed to the trustee proposal wants to set the line at $250 million.

A lawyer was scheduled to speak on behalf of those 118 firms on Monday, but he did not appear. D.J. "Jan" Baker of Latham & Watkins had, in written comments, assailed the trustee proposal as illegal and wasteful.

Baker preferred to meet in private, White said, adding that he was disappointed by the absence.

"Private meetings do not afford the level of transparency that today's meeting will provide," he said early on.

Baker did not respond to a request for comment later on Monday.

(Additional reporting by Nick Brown; editing by Howard Goller and Andre Grenon)

Dewey & LeBoeuf law firm files for Chapter 11 bankruptcy

Growing case law suggests that debtors should hope the bankruptcy court does not approve their car reaffirmation agreement.

By: Cathy Moran - California Bankruptcy Attorney

05/06/2012

If youve agreed to reaffirm, and essentially waive the bankruptcy discharge as to the car loan in order to keep the car, why would you want the court to find that the car loan represents a hardship to you or your family? Because pay and drive lives on if you are willing to reaffirm, even though the reaffirmation agreement is disapproved, according to a growing number of bankruptcy judges.

Reaffirmation before reform

Before BAPCPA became law in 2005, the Bankruptcy Code included a provision that said that merely filing bankruptcy was not a default on a loan if you were otherwise performing. That is, the ipso facto clause in the contract that made filing bankruptcy an event of default wasnt enforceable.

So, after a bankruptcy filing, the debtor could simply continue to make the payments on time and keep the car. If, in the future, he couldnt pay, the lender was limited to picking up the car. No deficiency judgment was available to the lender. Bankruptcy lawyers called this keep and pay , or pay and drive.

Car buyers squeezed by new law

Then the lobbyists for the car companies got their goodies inserted in bankruptcy reform, including removing the bankruptcy isnt a default provision. So, someone who was absolutely current on their car payments, but filed bankruptcy to deal with some other debt issue had just defaulted on the car loan, and was in danger of having the car repossessed, unless they reaffirmed the loan.

Reaffirmation agreements were historically seen as points of possible abuse and the Code provided that judges must oversee whether the debtor was making a sound and well informed decision when he agreed to resume the liability for a debt. In the car context, reaffirming a car loan meant that, if the debtor later on couldnt make the payments agreed upon, the lender could not only repossess the car, but also sue the debtor for the difference between what the car brought at auction and the contract price.

Between the right to a deficiency judgment and the fact that lenders could insist that a reaffirmation agreement contain the same expensive terms as the original agreement, debtors were over a barrel after BAPCPA.

Courts find the old route

Bankruptcy judges were called on to review reaffirmation agreements and the debtors budget. They were to determine if the debtor had enough income to make payments under the reaffirmed car loan and cover all the other necessary expenses of family living.

If the numbers didnt pencil out, lots of judges held that they could not find that reaffirming was in the debtors best interest. (Theres a story there, too, for how does a judge think a debtor just emerging from bankruptcy is going to replace a repossessed car, or get to work in most places without one?)

But judges read the provisions of the bankruptcy reform legislation and said, All the law requires the debtor to do it to timely sign and file the reaffirmation agreement. If he does that, and the court disapproves the agreement, the lender cant repossess the car so long as the debtor makes the payments on time and keeps the car insured.

Pay and drive lives on if the debtor goes through the motions of reaffirmation!

Nadya Suleman Files Chapter 7 Bankruptcy

05/01/2012

In filing for bankruptcy protection, "Octomom" Nadya Suleman said in court papers that her debts could approach $1 million. Suleman filed for personal bankruptcy protection in Orange County Superior Court on Monday.

In court documents reviewed by the Orange County Register, Suleman said she had $50,000 in assets and up to $1 million in debts. She reported she owes more than $30,000 in back payments on her home.

"I have had to make some very difficult decisions this year, and filing Chapter 7 was one of them," Suleman said in a statement released by her spokeswoman. "But I have to do what is best for my children, and I need a fresh start."

At the same time, her La Habra home could be auctioned off. Suleman and her 14 children could face eviction if the house is sold, which would compound her problems after recent allegations she had been neglecting her children while spending hundreds of dollars on herself for services such as Brazilian blowouts.

Officers from the La Habra Police Department accompanied social workers to Suleman's home last Tuesday after receiving a complaint, which said there was only one working toilet in the house and the children had to use portable training toilets in their bedrooms.

CAN I Buy A HOUSE AFTER BANKRUPTCY?

After filing bankruptcy, you have no more debts.Youmay start to think about buying a home.

You will have two concerns:savings for down payment and your credit score.

To buy a home,you need to have a downpayment. So,spend the first year after filing bankruptcy focusing on your savings account.

Bankruptcy filing will affect your credit score negatively. However, you can increase your credit score and rebuild your credit by opening a credit card account and paying the total balance monthly on a timely basis.

You must continue to pay your debts on time. If youve got student loans or a car loan, make those payments on time, they would be reflected on your credit report and help increase your credit score. Within two years of bankruptcy filing, and by making timely paymenst on your accounts after bankruptcy your creditworthiness will be reestablishedand willhelp you in qualifying for a home mortgage.

(Reuters) - The Los Angeles Dodgers were cleared on Tuesday to borrow $60 million to make payroll, but the team spent its first full day in bankruptcy battling with Major League Baseball.

The team needs the money to pay salaries, including those of its players, while it tries to sort out its long-term finances against the backdrop of team owner Frank McCourt's bitter divorce and the demands of the league.

The Dodgers on Monday became the sport's third team in three years to file for bankruptcy. But unlike the Chicago Cubs and Texas Rangers before it, the team did so with the league as an adversary, not an ally.

The bankruptcy apparently caught off guard the league and McCourt's former wife, Jamie, who is fighting a California court battle for half of her ex-husband's stake in the team.

"This was sprung on all of us," attorney Laura Davis Jones, who represents Jamie McCourt, told the U.S. Bankruptcy Court in Wilmington, Delaware.

The bankruptcy court judge said he would approve the team's request to borrow $60 million. The Dodgers will return to court on July 20 to seek approval to borrow up to an additional $90 million.

The Dodgers are incorporated in Delaware, whose bankruptcy court has a reputation for being friendly to debtors. The hearing in one of the courthouse's smallest courtrooms drew dozens of dark-suited attorneys, and kicked off with Judge Kevin Gross announcing: "Batter up."

The teamed has blamed Major League Baseball for the bankruptcy by rejecting a television deal that would have provided an urgent injection of cash as millions of dollars in debt and deferred compensation came due later this week.

An attorney for the Dodgers told the judge that the team and league were "at loggerheads," which drew a swift rebuttal from the league's attorney.

"Nothing could be further from the truth. Major League Baseball views the Dodgers as one of its cherished crown jewels," said league attorney Tom Lauria. "If there is anyone we are at loggerheads with, it is Mr. McCourt."

The league accused McCourt of "having siphoned off well over $100 million of club revenues" and bringing the team to the brink of missing payroll, according to court papers filed on Tuesday. A spokesman for the Dodgers did not immediately respond to a request for a comment.

On June 20, the league vetoed the Dodgers' proposed $3 billion, 17-year television contract with News Corp's Fox Broadcasting Co, saying it ran contrary to the best interests of the team, the game and fans.

The Dodgers plan a second attempt to sell the TV rights in bankruptcy, according to court papers.

The bankruptcy hearing was put on hold while attorneys for the league and the team spent 90 minutes in a conference room to work out differences over the emergency $60 million loan to be provided by a unit of JPMorgan Chase & Co

The lender has agreed to provide a total of up to $150 million.

Providers of bankruptcy loans often are able to use the loans to gain leverage over bankrupt companies, and the league offered to provide its own loan at a lower rate of interest than the 10 percent the Dodgers agreed to pay.

Lawyers for the Dodgers told the judge that the team's financial problems are short term.

The team has payroll to meet this week, as well as a one-time $10.5 million deferred compensation payment. It also is required to set aside $18 million under its collective bargaining agreement with the baseball players union.

Unlike most bankrupt companies, the team's assets exceed its liabilities, which should give the Dodgers room for financial maneuvering. But the McCourts' divorce battle further complicates the bankruptcy, as does the team's soured relations with Major League Baseball.

Forbes magazine in March ranked the Dodgers as baseball's third-most valuable team, worth $800 million -- more than twice what McCourt paid. Only the New York Yankees and Boston Red Sox are worth more, Forbes said.

The case is In re: Los Angeles Dodgers LLC, U.S. Bankruptcy Court, District of Delaware, No. 11-12010.

(Reporting by Tom Hals; editing by Carol Bishopric)

(Reuters) - The Los Angeles Dodgers filed for bankruptcy protection, blaming Major League Baseball for rejecting a television deal that would have given the storied baseball team an urgent injection of cash.

The filing marks a dramatic attempt by Dodgers owner Frank McCourt, who is embroiled in a bitter divorce from his ex-wife Jamie, to prevent the league and MLB Commissioner Bud Selig from seizing the team, which McCourt bought in 2004.

In a court filing, the team said it had been "on the verge of running out of cash" but that the Chapter 11 filing will allow it to meet payroll, sign players, pay vendors and continue playing baseball.

"It is becoming rather clear and likely inevitable that Frank McCourt will end up selling part or all of the franchise," said David Carter, a sports business professor at the University of Southern California. "I have to believe the back-and-forth between him and Major League Baseball leaves them where they won't be able to coexist much longer."

Selig responded to the bankruptcy filing with a statement blaming the Dodgers' financial woes on McCourt's excessive debt and his diversion of club assets to address personal needs.

"My goal from the outset has been to ensure that the Dodgers are being operated properly now and will be guided appropriately in the future for their millions of fans," the commissioner said.

"The ideas and proposals that I have been asked to consider have not been consistent with the best interests of Baseball. The action taken today by Mr. McCourt does nothing but inflict further harm to this historic franchise."

On June 20, the league vetoed the Dodgers' proposed $3 billion, 17-year television contract with News Corp's Fox Broadcasting Co, saying it ran contrary to the best interests of the team, the game and fans.

The deal promised an upfront payment to the Dodgers of $385 million, but Selig has criticized the proposed use of part of that money to fund McCourt's divorce.

McCourt has said the payment was crucial to the team's health. According to a court filing, the Dodgers need to pay or set aside more than $28 million for payroll by July 1.

"We brought the commissioner a media rights deal that would have solved the cash flow challenge I presented to him a year ago," McCourt said in a statement. "Yet he's turned his back on the Dodgers, treated us differently, and forced us to the point we find ourselves in today."

Forbes magazine in March ranked the Dodgers as baseball's third-most valuable team, worth $800 million. That is more than twice what McCourt paid, and trails only the New York Yankees and Boston Red Sox, it said.

NO WORLD SERIES SINCE 1988

Monday's filing punctuates a stunning fall for one of baseball's marquee teams, whose roots date to 1884 when it played in New York as the Brooklyn Atlantics.

The team became the Dodgers permanently in 1932, and broke Major League Baseball's racial barrier when Jackie Robinson began playing in 1947. It began playing in Los Angeles in 1958 and has called Dodger Stadium home since 1962.

This year, the team has a 35-44 record and has seen home attendance decline sharply. The Dodgers have won six World Series championships, but none since 1988.

A call to the office of Los Angeles Mayor Antonio Villaraigosa was not returned.

Baseball took over day-to-day control of the Dodgers in April amid worries about team finances, and security concerns that followed a brutal Opening Day beating of San Francisco Giants fan Bryan Stow in the Dodger Stadium parking lot.

"The filing preserves the status quo," said Jack Williams, a professor at Georgia State University College of Law in Atlanta who specializes in sports law. "Major League Baseball will have a major, if not the predominant, voice in the ultimate ownership structure for the team."

Monday's filing comes less than a year after the Texas Rangers baseball team emerged from bankruptcy, owned by a group that includes Hall of Fame pitcher Nolan Ryan.

Another marquee franchise, the New York Mets, is also overloaded with debt, and its owners, Fred Wilpon and Saul Katz, face a $1 billion lawsuit by the trustee seeking money for victims of Bernard Madoff's Ponzi scheme.

The owners are in talks to sell part of that team to hedge fund manager David Einhorn for $200 million.

Other teams to file for bankruptcy in recent years include the Buffalo Sabres and Phoenix Coyotes of the National Hockey League.

MANNY RAMIREZ, ANDRUW JONES ARE CREDITORS

The Dodgers arranged a $150 million, one-year financing from lenders led by affiliates of JPMorgan Chase & Co's Highbridge Capital Management LLC, so the team can operate normally while in bankruptcy, court records show.

According to a court filing, the variable interest rate on the loan would be at least 10 percent, and the team could draw $60 million immediately and $90 million later.

The Dodgers' filing in the U.S. bankruptcy court in Delaware shows between $500 million and $1 billion of assets and between $100 million and $500 million of liabilities.

Four other related entities also filed for protection from creditors, including one that owns Dodger Stadium.

The Dodgers said the team's largest unsecured creditors include former outfielders Manny Ramirez and Andruw Jones, who are owed $21 million and $11.1 million, respectively.

Ramirez retired in April rather than accept a 100-game suspension for violating baseball's drug policy, after serving a 50-game suspension in 2009. Jones plays for the New York Yankees.

Los Angeles Superior Court Judge Scott Gordon scheduled a one-day trial in August to decide whether the Dodgers belong to Frank McCourt, or whether the McCourts should split the team.

The McCourts' lawyers on June 17 said the pair had resolved all issues in their divorce except for the Dodgers' ownership.

Bankruptcy could give Frank McCourt "an exit strategy," said Carter, the USC professor.

"The Dodgers have historically been one of the greatest brands in sports," he said. "Buyers may view this as a chance to buy in with the knowledge they can rehabilitate the brand, rebuild the fan base, and add to its value over time."

The case is In re: Los Angeles Dodgers LLC, U.S. Bankruptcy Court, District of Delaware, No. 11-12010.

(Writing by Jonathan Stempel; Editing by John Wallace)

1.5 million Americans filed for bankruptcy in 2010

By Jerry White
6 January 2011

The number of people in the US filing for bankruptcy rose by 9 percent last year to 1.53 million, as more working families fell victim to job losses, plunging home values and unforgiving creditors.

The figure was the highest since 2005 when changes in the bankruptcy laws making it more difficult and costly to file led to a sharp decline in the number of Americans seeking court protection. The recent spike in casesdespite the added costs and legal hurdlesis indicative of just how desperate large segments of the American population are despite the official claims of an economic recovery.

Over the last three yearsas the economic recession and 2008 crash took hold4 million consumers filed for bankruptcy, with last years numbers matching the record levels reached before 2005. While most filers earn less than $30,000 and lack a college degree, a growing percentage of families with incomes above $60,000 and college degrees are being forced into bankruptcy.

As tens of millions are finding it impossible to pay their bills, the corporations and banks are raking in record profits, top executives are pocketing huge payouts and the richest 2 percent of the population is celebrating the tax cut handed to them by Obama and the congressional Republicans.

Now, the debate in Washington is dominated by a drive to forge a bipartisan consensus to slash social spending, cut taxes and regulation on big business and reduce wages and benefits in order to make American corporations more competitive and profitable This only underscores the class chasm between the corporate-political elite and the masses of working people who are facing a social catastrophe.

The growth in personal insolvency last year was seen in virtually every part of the country, according to the American Bankruptcy Institute. The sharpest rise was in the Southwest and Southeast, with Nevada recording 15,000 filings per million, more than double the 6,600 filings per million recorded nationwide. The state has the nations highest unemployment rate and credit card and mortgage delinquency, and one in every 99 homes is in foreclosure, according to realtytrac.com.

After Nevada, Georgia and Tennessee had the highest filing rates, each with more than 10,000 filings per million, according to the report. The states with the highest year-to-year increase were Hawaii (22 percent), California (19 percent), Utah (19 percent) and Arizona (18 percent).

Families are being driven into bankruptcy after a spouse has lost a job or had their working hours cut, or a small business has gone under, according to local news reports. Mortgage payments and other bills became too much to handle, with families receiving 15 to 18 calls a day from creditors before they filed for court protection.

Tracy Compo of Tucson, Arizona told the Las Vegas Review-Journal troubles began three years ago when her husband could no longer get overtime at work. Efforts to get the bank to modify their loan failed and they were forced into foreclosure on their home. They tried to raise income by selling off possessionsjewelry, clothes and anything else to pay the billsbut credit card debt continued to mount, and in December they filed for bankruptcy in hopes of getting a new start.

Its very depressing, Compo, a 32-year-old mother of three, told the Review-Journal, Its degradinglike youve lost all sense of control. I hate it. Im embarrassed by it.

In Nevada, bankruptcy lawyers said business showed no signs of slowing, with one attorney saying he increased his staff by a third just to handle the demand. Its as busy as it was last year, and it is going to get even busier, Anthony DeLuca told the Las Vegas newspaper.

In South Florida personal bankruptcy filings rose by a staggering 40 percent, the Sun-Sentinel reported, with the number of cases in Palm Beach, Broward and Dade counties rising from 24,681 in 2009 to 34,579 in 2010. Local reports attribute the sharp rise to the pace of home foreclosures, joblessness in the statewhere the unemployment rate is 12 percentand a wave of business closures.

David Langley, a bankruptcy lawyer in Plantation, told the Sun-Sentinel that many of his cases involved clients who were in construction, real estate or related businesses and professions. There is a ripple effectthe little restaurant that was near the construction site or near some real estate firm ended up having to file for bankruptcy. Often, he said, he filed both personal bankruptcy and business bankruptcy for the owner.

Medical expenses are one of the biggest causes of personal bankruptcy, with a Harvard University study carried out before the economic downturn attributing 62 percent of all filings to health care debts. The study noted that 78 percent of those filing bankruptcy had medical insurance.

According to the Economic Policy Institute, family health insurance premiums more than doubled between 1999 and 2009, far outpacing workers earnings and overall inflation, as employers increasing dumped the costs of medical care on their workforces.

The sharp increase in long-term joblessnessthe most dire since the Great Depressionhas worsened the situation. More and more families are forced to rely on credit cards to pay for food, utilities and other basic necessities, in addition to picking up the cost of their health insurance.

Increasingly those who still have a job are facing wage cuts and being forced into part-time and temporary positions. In the past, home equity loansbased on the rising value of their homescould be gotten to offset the decline in income. These are no longer an option as homeowners owe far more than the dwindling value of their homes. The tightening of consumer credit has also pushed people over the edge, after they borrowed in an effort to prevent bankruptcy.

The crisis is affecting every demographic group. A 2010 study from the University of Michigan Law School, The Rise in Elder Bankruptcy Filings, found that those 65 and older are the fastest-growing segment of the US population seeking bankruptcy protection, owing a median $22,562 to credit card companies. The findings are both striking and ominous, says John Pottow, author of the study. While multiple factors, such as health problems and medical debts, contribute to elders' financial distress, the dominant force appears to be overwhelming burdens related to credit cards.

While the Obama administration has handed the Wall Street bankers trillions and the wealthy a massive tax cut, it has done nothing to provide relief to those losing their homes, income and life savings. A report last month by the Congressional Oversight Committee noted that the Treasury Departments Home Affordable Modification Program has produced negligible results. Only half a million mortgage holders got help to save their homes, at least temporarily, since the program began in March 2009. During that period nearly 4 million households received foreclosure notices with the Federal Reserve expecting another 4.25 million over the next two years.

The political establishmentdominated as it is by the representatives of the corporate and financial eliteis oblivious to the social catastrophe facing working people. Obamas vice president, Joe Biden, who received large donations from the credit card industry, was one of the most fervent Democratic supporters of the reactionary 2005 legislation, which made it more difficult for working class and middle-class families to escape their debt burdens, while awarding as much as $1 billion a year to creditors, mostly banks and credit card issuers.

Signing the bipartisan bill into lawjust a few short years before both parties gave Wall Street the largest handout in historyPresident Bush declared, America is a nation of personal responsibility, where people are expected to meet their obligations. If someone does not pay his or her debts, the rest of society ends up paying them.

Consumer debt is consistent with bankruptcy filings

Research by the Federal Reserve indicates that household debt is at a record high relative to disposable income. Some analysts are concerned that this unprecedented level of debt might pose a risk to the financial health of American households. A high level of indebtedness among households could lead to increased household delinquencies and bankruptcies, which could threaten the health of lenders if loan losses are greater than anticipated.Use this page to list news articles and press releases favorable to your business. Here you might add a brief introduction. To add a new article, click the "Add an Article" button below.

(Source: American Bankruptcy Institute)

TOTAL BANKRUPTCY FILINGS UP 11 PERCENT THROUGH FIRST NINE MONTHS OF 2010 WHILE BUSINESS FILINGS DECREASE

November 8, 2010 Alexandria, Va. The 1,222,589 total U.S. bankruptcies filed for the first nine months of 2010 (Jan. 1 Sept. 30) represented an 11 percent increase over the 1,100,035 cases filed over the same period in 2009, according to data released today by the Administrative Office of the U.S. Courts. Consumer filings totaled 1,179,573 for the first nine months of 2010 representing nearly a 12 percent increase over 1,054,525 filed during the same period in 2009. Bankruptcies have continued to increase since the 2005 amendments to the Bankruptcy Code.

As the economy looks to climb out of the recent recession, businesses and consumers continue to file for bankruptcy to regain their financial footing, said ABI Executive Director Samuel J. Gerdano. With unemployment hovering near 10 percent and access to credit remaining tight, total filings in 2010 will likely exceed 1.6 million.

The 43,016 business bankruptcies recorded during the first three quarters of 2010 (Jan. 1 Sept. 30) represented nearly a 6 percent drop from the 45,510 business filings during the same period in 2009. Business filings during the three-month period ending Sept. 30, 2010, totaled 13,957 filings, down 8 percent over the 15,177 business filings in 2009. Chapter 11 business filings decreased nearly 5 percent to 2,916 during the third quarter of 2010, compared to the 3,060 filings during the similar period in 2009. Chapter 7 business filings totaled 9,807 during the three-month period ending Sept. 30, 2010, representing a 9 percent decrease over the 10,798 filings during the same period in 2009.

The 1,596,355 total filings for the 12-month period ending Sept. 30, 2010, were up nearly 14 percent from the same period in 2009, which totaled 1,402,816. Nonbusiness filings for the 12-month period ending Sept. 30, 2010, totaled 1,538,033, an increase of 14 percent from the 1,344,095 total nonbusiness filings calculated over the same period in 2009. However, business filings decreased slightly for the 12-month period ending Sept. 30, 2010, as the 58,322 business filings were down nearly 1 percent from the 58,721 business petitions filed in the 12-month period ending Sept. 30, 2009.

The 1,146,511 total chapter 7 filings for the 12-month period ending Sept. 30, 2010, represent a 16 percent increase from the 989,227 filings from the same period in 2009. Total chapter 13 filings increased 9 percent to 434,839 in the 12-month period ending Sept. 30, 2010, from 398,210 in the same period last year. In addition, total chapter 12 filings nearly doubled, increasing 45 percent from 487 in 2009 to 707 in 2010. Total chapter 11 filings fell, however, decreasing nearly 4 percent to 14,191 in 2010 from 14,745 in 2009.

The 412,380 total U.S. bankruptcies filed during the third quarter of 2010 (July 1 Sept. 30) represented a 6 percent increase over the 388,485 cases filed over the same period in 2009. Consumer filings totaled 398,423 during the third quarter of 2010 (July 1-Sept. 30), representing a 7 percent increase over the 373,308 filed during the same period of 2009. Consumer chapter 7 filings during the 2010 third quarter totaled 280,006, an increase of 5 percent over the 2009 third quarter total of 265,721. Chapter 13 consumer filings also increased during the three-month period ending Sept. 30, 2010, with the 117,893 filings, representing an 10 percent increase over the 107,142 filings during the same period in 2009.

BUSINESS FILINGS for the 3-month period ending Sept. 30, 2010, totaled 13,957, down nearly 8 percent from the 15,177 bankruptcy business cases filed in the same period in 2009.

NON-BUSINESS FILINGS for the 3-month period ending Sept. 30, 2010, increased 7 percent from 373,308 in 2009 to 398,423 in 2010.

The chapter breakdown of BUSINESS filings for the 3-month period ending Sept. 30, 2010, is: 9,807 chapter 7s, 2,916 chapter 11s, 202 chapter 12s and 1,011 chapter 13s.

The chapter breakdown of NON-BUSINESS filings for the 3-month period ending Sept. 30, 2010, is: 280,006 chapter 7s, 524 chapter 11s and 117,893 chapter 13s.

(Source: American Bankruptcy Institute)

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