Modesto Bankruptcy Lawyer Blog

In the last week, three major companies -- Saab, Solyndra and NewPage -- filed for bankruptcy protection from creditors after falling on difficult times.

So, if major, multi-million dollar corporations need bankruptcy protection, do you? As a homeowner or even just a consumer with large loans and unexpected bills that are piling up, is bankruptcy in Modesto right for you?

For many people, it is the right choice. For others, seeking a loan modification, credit counseling from a non-profit center or other options may be a solution. But the decision shouldn't be made lightly. If you are struggling with finances and considering this step, consult with an experienced Modesto Bankruptcy Attorney in order to determine what options may work best in order to get you the financial freedom you deserve.

The 64-year-old Swedish automaker Saab halted production in June and has applied for court protection from creditors in order to reorganize. The carmaker wants a court-run restructuring.

NewPage is the largest North American coated paper maker. The Ohio-based company has $4.2 billion in debt it seeks to restructure as suppliers have cut off credit, leaving the company up in the air. Competition from other nations and the rising costs of its main components -- energy, chemicals and pulp -- have made times tough for the company.

Finally, Solyndra, a solar power company, became the third such company in recent weeks to consider bankruptcy. Now, there are questions about whether a potential buyer for the company is in the United States, which could drive jobs elsewhere. European governments have cut subsidies and Chinese manufacturers have increased production, hurting U.S.-based companies.

All these companies are seeking court-based help for their financial woes and piles of debt. The average consumer has tens of thousands of dollars in debt as a result of credit card use, a mortgage, car loans, student loans and even medical bills. For many, the debt has simply become too much to handle.

Private job loss has hit many in Modesto and with California's government ever so shaky, state jobs may continue to fall as well. These are difficult times and difficult times often call for difficult decisions. One such decision may be whether bankruptcy is right for you.

If you have piles of debt and can barely make minimum payments, have a house that you've fallen behind paying for or just got slammed with an extended hospital stay or were diagnosed with an illness, bankruptcy may be a smart move.

Drowning in debt is frustrating, yet bankruptcy allows consumers to get back on track after following through with the process. It protects you from creditors and loan sharks and lets you start over, eliminating much or all of the debt you owe. Don't continue to skate by month-to-month or deal with pesky creditors calling. Get freedom.

Continue reading "Major Companies File For Bankruptcy in Modesto, Should You?" »

California officials scramble to move larger boats out of local marinas to keep them from being damaged from waves created by the 9.0 magnitude earthquake that hit the northeastern coast of Japan. Japan's recent natural disaster left millions of residents homeless and with nothing, after having experienced the latest tsunami with no warning and no preparation.

Modesto bankruptcy lawyers recommend California residents prepare themselves for natural disasters as we are vulnerable to the same type of events.

The effects of the earthquake in Japan have made its way to the California coast and have already caused at least $50 million in damages; that number is expected to increase, reports KY3.

Geology professor and director of the Humboldt Earthquake Education Center at Humboldt State, Lori Dengler, said, "This is an expensive event for California."

The Los Angeles Times reports that there are two types of tsunami threats in California caused by earthquakes: Ones that happen far away, as the one in Japan, and ones that occur closer to home and provide less time to prepare.

The California Earthquake Authority (CEA) asks if earthquake insurance is right for Modesto residents? The CEA recently upped its dwelling coverage to $100,000 with additional living expenses and as much as $15,000 in Loss of Use coverage. A total Guide to Earthquake Insurance for California homeowners is provided in this brochure.

While great strides have been made in the research of the earthquake and tsunami link, much has yet to be learned about how to motivate people in threatened areas to better prepare themselves for the possibly devastating results.

While no amount of planning can completely protect you from a natural disaster, the failure to plan ahead and ensure proper insurance can quickly lead to you and your family to bankruptcy in Modesto.

Continue reading "Japan Earthquake, California Fallout, Illustrates need for Adequate Insurance, Bankruptcy Protection" »

The number of January bankruptcy filings dipped below 100,000 last month for the first time in a year. January 2010 was the last time fewer than 100,000 filings were recorded, according to the National Bankruptcy Research Center, which reports filings were down 22 percent compared to December.

Bankruptcy lawyers in Stockton and Modesto continue to see consumers seeking Chapter 7 protection and Chapter 13 bankruptcy in record numbers throughout the U.S. Bankruptcy Court's Eastern District of California.

Primary drivers of bankruptcy filings continue to be foreclosures and bad real estate debt, unemployment, medical bills and insurmountable credit card debt. January filings totaled 3,924, up 5.7 percent from a year ago. By comparison, just 1,829 were reported in the Eastern District in January 2005.

Last year, 54,365 sought bankruptcy protection in the Eastern District of California, compared to 17,397 in 2007, before the economic downturn.

Nationwide, about 1 in every 3,000 people sought bankruptcy protection. As the economic recovery took tentative hold last year, the number of filings grew increasingly uneven across the country.

Filings in Nevada remain at a level more than twice the national average. And rates in Georgia, California and Tennessee remain at more than 1.5 times the national average. Eight areas reported rates less than half the national average: Alaska, South Dakota, District of Columbia, South Carolina, Vermont, New York, Wyoming and North Dakota.

California is one of just four states where January filing rates were higher than last year. The others were Delaware, Idaho and Utah. Several state reported levels at least 30 percent below last year's, including Vermont, Connecticut, New York and D.C.

Continue reading "Bankruptcies in Modesto, Stockton, Continue to Increase Even as Numbers Fall Nationwide" »

Several large California nonprofits have recently had to reorganize and/or declare bankruptcy in order to keep their doors open. Effective July 1, 2010, American Red Cross chapters in Stanislaus and San Joaquin counties folded into the Sacramento-Sierra regional organization in order to continue providing services. Offices in Modesto and Stockton are still open and operating as normal. The consolidated chapters will still continue to offer emergency assistance to individuals and families as needed, but any unnecessary expenses have been cut drastically.

Additionally, two support non-profits tied to Yosemite National Park have also folded into each other to save money. The Yosemite Association and the Yosemite Conservancy will now work together on fund-raising efforts and educational efforts. Even the Stanislaus United Way is considering collaborating with other offices to reduce expenses as an alternative to closing. Other nonprofits, such as the Modesto YMCA, have simply had to shut down due to financial constraints. Still other businesses, such as the Fresno Metropolitan Museum, have filed for bankruptcy in an effort to get back on their feet.

Filing for Commercial Bankruptcy
Non-profits have many expenses to meet, including payroll, benefits and tax filings. Just like any other business, these costs can become overwhelming in times of economic crisis. If your non-profit business is struggling to make ends meet, you may consider contacting a commercial bankruptcy attorney who can advise you on your options. Chapter 11 bankruptcy is designed to reorganize commercial finances and sell off assets in order to pay off outstanding debts. Non-profits can also file for Chapter 13 bankruptcy in order to reduce debts and get on a 3 to 5 year repayment schedule based on financial capability.

Some of the highest expenses that small business owners often incur are related to advertising. The costs of TV ads, flyers, billboards and marketing personnel can quickly add up. And, without targeted efforts, advertising dollars can be quickly wasted. Further, many Modesto entrepreneurs find themselves struggling with the choice between spending money on advertising and paying their bills.

In order to reach a large segment of potential customers, it's important to be able to advertise effectively, yet within your means. If mounting debt is putting your business at risk, here are some ways to reduce advertising expenses while still reaching out to your target audience:

1. Use social networking sites like Facebook, LinkedIn, Twitter and MySpace to connect with people who would likely buy your goods/services. Create a page for your business and offer special deals to people who "follow" you.

2. Rely on word-of-mouth to drive customers to your business. Offer your current clients discounts for bringing in referrals and make an effort to know the names and buying habits of all your customers.

3. Incentivize your current clients by offering returning customer deals that require them to shop frequently.

4. Stop spending money on expensive TV ads if you're not seeing any return on that investment. Instead, focus your efforts on creating free email newsletters and mobile text blasts at little or no cost to you.

If you're still having trouble making ends meet, you might consider filing for Chapter 13 or Chapter 11 bankruptcy to save your business. In Modesto, the ailing economy has made it difficult for many small businesses to stay open, but there is help. Contact a Modesto bankruptcy lawyer to discuss your concerns.

Chapter 11 bankruptcy just might be the saving grace that your small business needs to stay afloat in Modesto. The stigmas that are sometimes associated with individual bankruptcy aren't nearly as prevalent in the business world, because entrepreneurs understand that Chapter 11, also known as "restructuring" or "reorganization" bankruptcy, can be a viable tool that can save your business from property foreclosure, repossessions of equipment and vehicles, or even permanent closure due to overwhelming debts.

Corporations, sole proprietorships and partnerships can file Chapter 11. In order to qualify for Chapter 11 commercial bankruptcy, your business must pay a $1,000 filing fee. It is highly recommended that businesses file for Chapter 11 with a qualified commercial bankruptcy lawyer so that all the paperwork is filed swiftly and accurately. A lawyer can also help you devise the debt management plan that must also be filed with your claim.

Chapter 11 bankruptcy is similar to Chapter 13 bankruptcy in that your outstanding bills are stretched out over a period of 3 to 5 years for repayment. This reduces your monthly liability and allows you to restructure your business's financial plan to match your ability to pay. You can also choose to liquidate your assets in order to pay off debts over time. In rare cases, a court-appointed trustee will oversee these plans closely, but typically, a business needs only to present a plan to the court for approval.

It's important to note that Chapter 11 does not discharge business debt. However, when you file for Chapter 11 commercial bankruptcy, an "automatic stay" will immediately go into effect, stopping all creditor collections and harassment, foreclosures and repossessions, at least temporarily. During this time, you can work with your bankruptcy attorney to create a proactive plan to eliminate your debt and save your business.

On April 27, 2010, mid-level department store chain Gottschalks announced it would be reopening two new stores in Central California in the fall of 2010. This news came as a shock to many residents in the area, since Gottschalks had effectively closed its doors in July 2009 after failing to reorganize its outstanding debt under Chapter 11 bankruptcy. All 58 stores were liquidated and closed, indicating that company was done for good. However, the liquidation process actually put the company in a better position to start anew.

The new chain, possibly named Gottschalks by Joe Levy, Inc., will stay true to their customer base as an independent department store chain catering to moms, students and other buyers with mid-level income. Gottschalks will re-vamp its design to offer customers a new, yet familiar experience. Former company chairman Joe Levy said that the Fresno-based chain will stay in the area, cutting the ribbon on their first new store in Clovis on November 1. Stores in Oakhurst and Auburn will likely be reopened soon thereafter.

Bankruptcy May Be Able To Save Your Business
Bankruptcy doesn't have to end your business, it can actually be just the beginning of a new frontier for you. The lesson to be learned from Gottschalks is that if you're considering Chapter 11 bankruptcy, you might be able to save your business as well, or at least reopen another business after a successful liquidation process.

There are certain restrictions you must follow and very strict deadlines that must be met in order to file for commercial bankruptcy in California, though, so it is vital that you have a reliable bankruptcy lawyer on your side. A clever financial consultant can also be an excellent resource for Chapter 11 reorganization.

Chapter 13 bankruptcy allows individuals in Modesto to pay down debt over a period of time, usually 3 to 5 years. However, this type of bankruptcy also applies to self-employed business owners and sole proprietorships. If you're self-employed and you are struggling with mounting debt, Chapter 13 may be the right solution to help you pay off bills and stop creditor harassment, foreclosure and/or repossessions.

Chapter 13 bankruptcy is available to self-employed business owners who meet the following criteria:

- You must be an individual, sole proprietor and/or small business owner (Chapter 11 is for large businesses, partnerships or corporations).

- Your debt (personal and business) must not exceed $360,475 in unsecured debt (i.e. credit cards) and your secured debt (debt backed by collateral) must not exceed $1,081,400.

Once you file for Chapter 13 bankruptcy with a professional bankruptcy attorney in Modesto, the court will need to approve your extended repayment plan. Once in place, spreading your debts across this amount of time can drastically reduce your monthly payments and help you devise a smart financial plan to save your business as well as your personal property.

No interest will accrue on your accounts as long as you continue to make the court-arranged payments as outlined by your bankruptcy plan. Some secured loans, such as those on business vehicles, may not be eligible for repayment under Chapter 13. However, with a smart plan and a qualified bankruptcy attorney, Chapter 13 can be an effective tool for many Modesto sole proprietors.

Despite protests from state officials and employees, the Fremont-based Toyota manufacturing plant known as NUMMI (New United Motor Manufacturing Inc.) is moving ahead with plans to close the production facility as of April 1, 2010. In lieu of severance, the plant is offering workers large bonuses (up to $50,000) to stay on the job until the end of the month. Labor unions are discussing how these bonuses will be paid out and how pension plans will be covered for qualified workers after their employment is terminated.

The reason for the plant closure is becoming all too familiar to many Modesto area businesses: bankruptcy. NUMMI was a 50-50 venture between Toyota and General Motors Corporation, and it must shut down as a result of GM's bankruptcy filing and subsequent required liquidation of essential assets. This factory is the last remaining car production plant in the state of California. After it is closed, all major operations will be located out of state, leaving a large gap in the production industry statewide.

No matter if companies are the size of GM or simply mom-and-pop corner stores, commercial bankruptcy filings in the Modesto area have far-reaching impacts. As a result, city and state revenues decline and unemployment levels rise. According to the LA Times, this particular plant closure will essentially put 25,000 California residents out of work and cost taxpayers $2.3 billion in job-replacement costs. Local communities could stand to lose $90 million a year in revenue over the next 10 years.

If you own a Modesto business that is struggling, a bankruptcy lawyer can structure a plan for you that will help relieve your financial troubles to keep you in business. You can file for Chapter 7, 11 or 13 bankruptcy, depending on your situation. Farmers can take advantage of Chapter 12 bankruptcy to reorganize agricultural expenses.

Commercial bankruptcy rates in Modesto, CA are on the rise. In particular, the economic recession has had a marked effect on small and medium-sized businesses in this region. In June of 2009 alone, the U.S. Courts website reports that more than 16,000 businesses in the U.S. filed for commercial bankruptcy. Of those, 3% were located in the Modesto area. Considering this community is only home to 0.06% of the country's total population, this is a remarkable number compared to other areas of the country that are much larger and more densely populated with businesses.

Commercial Bankruptcy Options
Bankruptcy is often an attractive option for many business owners whose revenue simply can't match up with their expenses. Corporations, LLCs and partnerships are all eligible to file for Chapter 7 or Chapter 11 bankruptcy. Sole proprietors have the option to file for Chapter 13 bankruptcy and farmers can utilize Chapter 12 bankruptcy to reorganize debts.

Chapter 7 bankruptcy applies to commercial cases just as it does for individuals: it eliminates a business's debts by selling off assets in order to pay creditors. Chapter 11 bankruptcy helps businesses reorganize debt into a feasible payment plan out of future income or from the sale of assets. It's basically the same as Chapter 13 bankruptcy, except that it has higher debt limits. Chapter 12 bankruptcy is designed for farmers looking to reorganize debt. It allows the debtor to retain all property to pay off debts out of future income. Only a commercial bankruptcy lawyer can help you accurately file the correct paperwork needed for any type of bankruptcy in Modesto.

The community here in Modesto continues to feel the economic woes the nation is feeling. Although the country would like to think the economy is getting better, there is a growing rate of bankruptcy filings among businesses throughout the country, including Modesto. The Reuters news service reported that business bankruptcy filings were 7 percent higher in January, 2010, then in January, 2008. With so many business bankruptcy filings it is apparent the economic slump will continue into 2011. That means more bankruptcy filings in Modesto as any lawyer will tell you.

The Reason: As long as consumers are hurting, businesses will continue to hurt as well. The national unemployment rate hit 10 percent in December, 2009, and then fell to 9.7 percent in January. These numbers are probably higher in actuality given the fact that many people have given up searching for work. The national unemployment rate takes into consideration those that are actively searching for work and as we all know, many have given up entirely. Even those that have work are worried about losing their jobs, so as a result, people aren't spending like they used to. This has certainly led to many bankruptcy filings here in Modesto.

Foreclosures Enhance the Problem: Foreclosures continue as housing values plummet. According to RealtyTrac.com, there were 2.8 million foreclosures in 2009, making 2009 a record high for foreclosures. When people are unable to pay their mortgage, they stop spending on other goods that businesses thrive on, thereby increasing bankruptcy filings in Modesto and the rest of the country.

What should we do? Sadly, it doesn't look like bankruptcy filings will be decreasing anytime soon. Bankruptcy attorneys in Modesto are busier than they have ever been. The good news is that the United States has been through this many times before. The economy has cycled up and down through the years. That will certainly happen at some point in the future. People will once again increase their budgets as the housing market will soar to new heights all over again. Prosperity will soar throughout the country all over again. People will naively believe the markets are indestructible. Then, the economy will once again tank and we will be right back to where we started. Bankruptcy will soar throughout Modesto and the rest of the country. Bankruptcy lawyers will be working overtime, especially here in Modesto and the rest of the Central Valley.

We'd all like to think that the nation's economy is improving, but the rising number of business bankruptcy filings offers proof that commercial businesses throughout the country are still hurting. According to a recent story from the Reuters news service, business bankruptcy filings in the United States this January came in 7 percent higher than in the same month in 2008. An astounding total of 6,502 U.S. businesses filed for bankruptcy protection in January. At this rate, the economic slump will continue throughout the year and into 2011. That's the type of bad news that no one wants to hear.