Chapter 9 Bankruptcy And Its Impact On You-Image via Wikipedia

Chapter 9 bankruptcy or what is commonly called municipal bankruptcy allows cities and towns to restructure its finances in much the same way that a Chapter 11 bankruptcy allows a business to restructure its debts. But what impact will a Chapter 9 bankruptcy have on individuals living in that town. Let’s take a look at a few:

1. A city in a Chapter 9 bankruptcy will be forced to work within a budget to pay down its debts.  This could mean that those living within a bankrupt city will face an increase of taxes while there is a decrease in services.  Cities in municipal bankruptcy may need to cut essential services such as reducing the number of firefighters and police officers on the street.  Or, reducing the hours of the library branches.  Other reductions could also include fewer trash pickups.
2. Chapter 9 bankruptcy will give a city the power to renegotiate collective bargaining agreements. For example, the city may be able to reduce the amount of pay that city workers receive or even reduce their benefits, something that would be nearly impossible outside of municipal bankruptcy. If you work for the city, you could face a pay freeze. Or, if you’re retired and receiving a pension, the maximum amount you can receive may be reduced if the city can convince the bankruptcy court that is necessary for the municipality to get into the black financially.
3. While there may be some initial hesitation by investors to buy the municipal bonds of a city in Chapter 9 bankruptcy, once the city creates a feasible plan to restructure its finances it will be better positioned to attract investors to the city.

(source: http://www.courierpostonline.com/article/20110227/OPINION01/102270331/1005/OPINION/Municipal-bankruptcy-should-last-resort)

How Could A Government Shut Down Impact My Bankruptcy Case-Image via Wikipedia

As federal budget negotiations continue, federal courts are developing contingency plans that could keep the bankruptcy courts and other courts funded for at least two weeks in case there is a government shutdown.

As contentious budget negotiations on Capitol Hill raise the specter of a possible government shutdown this month, federal court official say they are preparing contingency plans that include funding the courts only with collected fees and not congressional appropriations.

Bankruptcy courts, which collect substantial fees from both businesses and consumers filing for relief from creditors, could be a key funding source, said Judge Randall L. Dunn of the U.S. Bankruptcy Court in Portland, Ore.

Dunn, the president of the National Conference of Bankruptcy Judges, said in the shutdowns of the mid-1990s, bankruptcy fees funded the rest of the court system for about two weeks.

But if a government shutdown continued for longer than two weeks, bankruptcy debtors and their attorneys could experience the following:

1. A delay in bankruptcy petition processing. An extended shutdown of the government could cause furloughs of employees, thus creating a shortage of staff available to process bankruptcy petitions.
2. A delay in bankruptcy hearings, including the meeting of the creditors and adversary hearings. Once again, the furlough of employees could significantly delay bankruptcy hearings.
3. The shutdown of the electronic processing of bankruptcy petitions as the court system runs out of money.
4. Finally, some bankruptcy courts may be temporarily closed if a government shutdown goes on for longer than two weeks.  Bankruptcy debtors located in affected locales could see their cases severely delayed due to closures.

(source: http://blogs.wsj.com/bankruptcy/2011/03/01/bankruptcy-fees-could-fund-courts-during-government-shutdown/)

Four Reasons Why Filing Pro Se In Bankruptcy Could Be Costly-Image by Nemo's great uncle via Flickr

As the recession drags on and more debtors turn to bankruptcy for help, many businesses are propping up offering bankruptcy “services” such as online “advice” and forms.  Some are suggesting that debtors skip the expense of working with a bankruptcy attorney and do a DIY bankruptcy filing Pro Se.  However, what they fail to mention that while these pro se debtors may save money in the short-term, the long-term costs of filing bankruptcy without a bankruptcy attorney can be costly. Let’s take a look at how a pro se bankruptcy filing could cost you:

1. Filing bankruptcy has always required the expertise of a professional but after the 2005 bankruptcy reform laws were passed, the process became even more complex.  Just filing the paperwork for bankruptcy is very involved and one mistake could put a debtor at risk for losing their automatic stay protection.
2. Creditors who are looking to squeeze every dime they can out of bankruptcy debtors see pro se filers as easy pickings.  A debtor without a bankruptcy attorney is more likely to have their bankruptcy case and discharge challenged.
3. Bankruptcy law is complex and often changes.  Different rulings by different judges could impact the debtor’s bankruptcy case in a way they cannot foresee unless they constantly stay on top of bankruptcy trends. This lack of knowledge increases the chances of a debtor’s bankruptcy case being dismissed due to debtor mistakes.
4. The bankruptcy trustee will not take responsibility for educating a pro se debtor.  The bankruptcy trustee is there to protect the interests of the creditors and the bankruptcy estate.  For example, if the debtor fails to claim an exemption, the trustee won’t remind them. Pro se debtors have no advocates when they step into bankruptcy without an attorney.

(source: http://www.mortgage11.com/2011/02/filing-bankruptcy-online-with-totally-free-bankruptcy-legal-advice/)

Among the many things to think about when considering bankruptcy, is “Which set of exemptions should you use?”  The book, Personal Bankruptcy For Dummies, speaks of the choice that debtors are faced with.

The book says:

“Although bankruptcy law is generally the province of the federal government, a number of states have their own provisions with regard to exemptions, giving people the chance to choose between exemptions offered under the Bankruptcy Code (federal exemptions) and those provided by their own state legislature.”

The book goes on to list several states, among those, Texas, where the following rule applies, “Debtors can choose local or Bankruptcy Code exemptions, based on the jurisdiction where they lived for the longest period during the 180-day span immediately preceding the petition date.”

Also, an important thing to mention is that debtors can’t pick and choose different exemptions.  You have to use one set of exemptions or the other.  If you thought that you could just pick different ones here and there, think again.

A debtor will of course choose the set of exemptions that will benefit them the most, but the hard part is figuring out which set of exemptions is the best for your situation.

A high-quality bankruptcy attorney will know all of the little known details of the different sets of exemptions, so it is important to get expert advice.  If you are faced with difficult financial decisions, contact a bankruptcy attorney as soon as possible.  The amount of help that an attorney can provide will out weigh any cost that you are afraid of.  Find out what exemptions you will be allowed, by contacting a bankruptcy attorney.

According to the Denton Record-Chronicle, The Denton City Council “is poised to adopt a $28 million budget for 2009-10, a figure that represents about 3 percent less in expenditures overall compared to the adopted 2008-09 budget.”  The City of Denton re-negotiated its health care insurance which resulted in savings of about $364,000 and chose not to fill two vacated law enforcement positions… hoping that the streets will be as safe with two less officers and that the health care for their employees will be the same

The recession has forced everyone to make tough decisions.  Like Denton, some are raising deductibles on insurance to get rate breaks.   The caution is that if you have an accident you will have to pay more.  Without your car, you may also be risking your job.

Everyone is cutting back, but before you put yourself at further risk with extreme cuts, explore all of your options.  Bankruptcy may be the better option because it is a long term fix, not a temporary trick.  To know if bankruptcy is the best option for you, contact a qualified bankruptcy attorney.  They will walk you through the process so that you have the information to make the safest decision for you and your family.

Imagine flying somewhere only to end up stranded at your destination, because the airline you used to get there suspended operations.  This scenario turned into a reality for some SkyEurope passengers.  The passengers were forced to buy tickets from other airlines in order to return home.

An article on USATODAY.com documented the situation for the airline.  The article said, “SkyEurope Airline AS, a Central European discount airline, said Tuesday it has filed for bankruptcy and that all its flights, sales and operations have been suspended immediately.  The company cited the ‘lack of sufficient interim funding to finance ongoing operations.’ Trading in the company’s stock was suspended from the start of trading on Tuesday, a statement from the Vienna Stock Exchange said.  The troubled airline obtained credit protection in Slovakia in June.  It reported a loss of close to euro60 million ($85.63 million) in the 2007-2008 business year, with a turnover of euro260.9 million ($372.36 million).”

The airline has been having issues dealing with its debts recently, even going as far as asking its employees to wait to be paid.  The company said at that time that it would have to suspend operations if a majority of the employees would not agree to wait.  Most of them did agree.

In any case, the bankruptcy seems like something predestined.  The airline started operating in 2002, and hasn’t made any money since.  There aren’t many companies that can survive as long as the airline did under those circumstances.

The company probably should have sought bankruptcy protection sooner, because the company likely wouldn’t have had to suspend operations.  Problems just began to compound on each other, and there wasn’t any way out.  If you are having extreme financial difficulties in your life, don’t let them get that bad.  Most, if not all, of your debts can be wiped out.  Contact a bankruptcy attorney as soon as possible to figure out what will help you now.