Bankruptcy Lawyers Blog

Bankruptcy trustees in South Georgia claim that the number of bankruptcies being filed is growing every week. Whether they are personal foreclosures or business bankruptcies, the number of buildings being auctioned off every week is growing.

While many say that the former employees of businesses that have filed for bankruptcy will start anew and make their own businesses, at the moment, the economic downturn is hurting many different people in the South.

One of the biggest areas of foreclosure and bankruptcy is in the building and construction market. There are many small construction businesses filing for bankruptcy because very few new homes and commercial buildings are being built at the moment. Carpet companies, electric companies, and plumbing companies are also feeling the hard times because there is much less work to go around than in previous years.

One of the reasons these companies are filing for Chapter 7 bankruptcy, Chapter 13 bankruptcy, and Chapter 11 bankruptcy is because they can't operate at a loss for very long. The construction business operates on a bid system; the people who offer to do the job at the lowest cost for the buyer usually get the job. Unfortunately, the lower and lower your offer gets, the less profit you make on the job itself. In the end, businesses are unable to make enough profit to continue running.

If you are a small business owner and you believe you will have to file for bankruptcy, one of the best things you can do is contact a bankruptcy lawyer to help you. An experienced bankruptcy attorney can help you pay off creditors and make sure you start on the road to financial recovery as quickly as possible.

Nearly 800 Chrysler auto dealers will be closing their doors as a result of the automaker's emergence from Chapter 11 bankruptcy. In just one month, about a quarter of all Chrysler auto dealers will be shut down.

The dealers the automaker is focusing on have failed to produce more than 100 new car sales over the course of the past year. While the company claims that many of these dealers are redundant, they have yet to say what affect this will have on local economies and what potential unemployed workers will do for jobs.

In addition to redundant dealers, Chrysler is going to look at dealers that have auto sales primarily in used cars rather than the newer, more expensive cars. According to Chrysler, 44% of the dealerships being closed also sell cars that are not Chrysler. These dealership closings are all apparently part of Chrysler's bankruptcy strategy called Project Genesis. With this new strategy, Chrysler is going to attempt to integrate their three strongest brands: Dodge, Chrysler, and Jeep.

Bankruptcy is not something that is only happening to large businesses. Small business bankruptcy claims and individual bankruptcy claims are becoming more and more common as well. Regardless of the situation, a bankruptcy attorney is essential if you are filing any type of bankruptcy claim.

Unless there is a major change in the financial status of General Motors during the next few months, it is likely that the auto manufacturer will have to file bankruptcy by June 1. Over the past few weeks, there have been several discussions between GM officials and President Obama's automotive task force regarding this likelihood.

At the beginning of April, the task force gave GM 60 days to come up with a restructuring plan for the company. They are currently evaluating whether the auto manufacturer can once again become a viable company.

GM's strategy seems to be to prepare for a quick, "surgical" bankruptcy. This strategy will most likely be challenged by bondholders who would stand to lose a great deal of money as a result.

GM's plan would split the company in two: one part would include their strong assets, such as Chevrolet and their Chinese operations; the other part would include their underperforming assets and billions of dollars in debt that they currently owe.

While proceeds from the government's sale of equity in the better half of the company would help repay parties owed money by the weaker half, this sum would most likely not come close to settling all of GM's massive debts.

General Motors is hoping to make it through bankruptcy court in a few months instead of the typical year it takes many companies. However, it will be up to a judge to decide if the auto manufacturer can move forward with their accelerated bankruptcy plan.

The impending bankruptcy looming over auto manufacturer General Motors has many people concerned for the welfare of the local Michigan economy. Currently, the corporation has until the end of the month to prove that it is a viable company. If they can, they will most likely receive additional bailout funds from the federal government to help them stay afloat. If they are unable to do so, they will most likely have no choice but to file bankruptcy.

GM would have two choices if they file bankruptcy: they could file Chapter 7 (liquidation) bankruptcy or they could file Chapter 11 (reorganization) bankruptcy. Filing Chapter 7 would have disastrous consequences on the local Michigan economy and most likely on the national economy as well. It is less clear how Chapter 11 bankruptcy will affect the Michigan economy. Most likely, it stands to take a serious hit, but the extent of this hit hinges on several factors:

• Under Chapter 11, GM could request that the courts alter the terms of their labor agreements with the auto union. GM would have to prove that the changes are strictly intended to enable them to survive bankruptcy as a viable company. However, union workers could stand to lose a great deal in terms of salary and health care benefits.
  
• Retirees will most likely also be affected. GM's retirement fund is currently underfunded due to losses in the stock market. Under Chapter 11, there is a chance that GM retirees will see their benefits slashed due to lack of funding. Benefits such as health care, which are currently provided for retired salaried employees, may get cut entirely.
  
• Suppliers will struggle under a GM bankruptcy as well. Suppliers are already feeling the cash crunch due to slumping car production, leading to fewer parts being ordered. However, under Chapter 11 bankruptcy, GM will be able to choose which contracts it wants to honor and which it does not. Many suppliers could lose contracts that they currently have with GM, forcing them into financial crisis.
  
• White collar employees may face greater challenges than union workers. Their jobs can be eliminated and their wages can be cut more easily than those of union workers. Salaried white collar employees have already been hit hard by the economic downturn, as GM has already implemented massive layoffs to this sector of their work force.
  
• Auto dealers may be affected as well, especially if auto production continues to decline.
  
• GM car and truck owners may have to worry about whether or not their warranties will be honored. Companies have the ability to eliminate warranty service during Chapter 11 reorganization. However, it is unlikely that GM will do so. If their intention is to emerge from bankruptcy as a stronger company, they will need consumer confidence to accomplish this goal. Honoring customer warranties is crucial for maintaining consumer loyalty and confidence during tough times.
  
• Local government will be hurt as well. Bankruptcy will most likely result in lost tax revenue for the local government, as well as rising unemployment, which will further put a strain on governmental resources.
  

Only time will tell how the current state of General Motors will impact the local Michigan economy. Unfortunately, Michiganders may be in for a long and bumpy ride.

Peanut Corporation of America, the company responsible for the recent salmonella outbreak across the country, filed for Chapter 7 Bankruptcy last Friday.

The bankruptcy filing capped a horrendous week for the company. Earlier in the week, the company closed a plant in Texas after health inspectors discovered dead rodents, rodent excrement, and bird feathers in a ventilation shaft. A Congressional hearing also discovered that Peanut Corporation of America owner and president Stewart Parnell had knowledge of salmonella contamination, yet still ordered employees to ship these products to food manufacturers.

A lawyer for the company stated that bankruptcy was just about the only option left to the corporation. The salmonella outbreak has crippled its operation to the point where they could not conduct business at all without bankruptcy and reorganization.

By filing bankruptcy, the company will also be protected from the many product liability and wrongful death lawsuits it would have faced from the hundreds of Americans who have suffered serious illness or death from their contaminated peanut products. It seems somewhat unfair that Peanut Corporation of America will not be held accountable for criminally negligent actions committed on the part of their management. Perhaps bankruptcy laws should be revised to prevent this from happening in the future.

This is a critical time for American auto manufacturers. Profits have been falling for quite awhile, and both GM and Chrysler may be headed toward bankruptcy without financial relief from the federal government. GM is closing approximately 20 plants across North America in anticipation of producing 250,000 fewer cars in the first quarter of 2009 than they did in the first quarter of 2008 (a reduction of about 30%). But is bankruptcy the best option for the auto manufacturers?

There are varying opinions on this matter. A recent survey conducted in early December polled 1,063 adults across the country. The findings indicated that only 26% of new car buyers would be willing to purchase a car produced by a company in bankruptcy.

The primary logic behind this hesitation on the part of consumers lies in the fear that if the bankrupt auto company eventually folds, people stuck with new cars from this manufacturer would be unable to receive the warranty service they deserve. This was certainly the situation with Daewoo, the last auto company that went bankrupt.

However, there are several prominent economists who argue that bankruptcy would in fact be the best option for several auto manufacturers. As part of the bankruptcy proceedings, these companies would undergo a reorganization that may leave them stronger in the long-run. Furthermore, the bankruptcy proceedings would most likely dissolve union contracts, leading to slightly lower wages for auto workers. Bankruptcy would also dissolve contracts regarding health payments and pension obligations. These factors have played a major role in the tenuous economic situation experienced by the big 3 auto manufacturers. By filing bankruptcy, these companies would also have the ability to restructure their debt, providing them with much lower interest rates. For these reasons, bankruptcy may give the big 3 their best chance at survival in these tough economic times.

Filing bankruptcy is a serious decision that should not be made lightly. It can be a gut-wrenching experience that will most certainly affect you for many years. It will take a long time to rebuild your credit after filing bankruptcy, and this will impact many areas of your life, including buying a home or a car and obtaining affordable insurance.

Before deciding that bankruptcy is the right option for you, it is important to explore all of your other options. While the bankruptcy laws are in place for a reason and can help you discharge insurmountable debts in the right situation, it is best to consider it a last resort. Ultimately, you must choose the best path to financial recovery available to you.

If you are a homeowner, you may be able to take out a low-interest home equity loan that will enable you to consolidate all of your other debts. Frequently, this interest rate will be lower than that of your other debts, and you may be able to pay off your debt slowly in this manner. This is only one option available to you. You should consult with a financial advisor to explore the many other options available to you before deciding to file bankruptcy.

If you decide that bankruptcy is the best decision for you, then you must decide whether to file Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. Chapter 7 is reserved for those people who truly need all of their debts completely discharged. Bankruptcy laws changed in 2005, making the requirements for filing Chapter 7 much stricter. For those who don't qualify for Chapter 7, there is the option of Chapter 13 Bankruptcy, where you must repay part of your debts according to a fixed payment plan.

The laws and regulations governing bankruptcy are very complex. It is important to hire an attorney specializing in bankruptcy law if you do choose this route. Please contact The Bankruptcy Directory today for a listing of lawyers in your area.