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Subprime vehicle loans – according to an article in Automotive News and Bloomberg “about a third of the risky car loans that are bundled into bonds are considered “deep subprime,” a level that has surged since 2010 and is translating to higher delinquencies on the loans, according to Morgan Stanley.”
Automotive financing is following the wise (that is intended to be sarcastic) decisions made in the mortgage lending market. Surprise – Morgan Stanley’s Vishwanath Tirupattur, James Egan and Jeen Ng said in a report dated March 24 that “consumers are falling behind on most subprime car loans, but deep subprime borrowers have deteriorated fastest.” The subprime loans are sold on the high-risk lending market in a method referred to as “securitization”. Which means loans that are high risk are bundled together and sold to investors (like your retirement loan portfolio).
So who is obtaining these “subprime” auto loans? Usually this is a borrower who has a credit score below 600. Folks in this group are considered high credit risks.
Bank/Investors willing to take high risks
As Wall Street banks have found it tougher to profit under new regulatory regimes born out of the last subprime crisis, they’ve become more willing to underwrite riskier auto-loan asset-backed security sales. Investors, starved for returns with about $8 trillion of debt globally carrying negative yields, have in turn proven to be insatiable, further facilitating higher levels of risk in the market for the securities.
Losses increasing higher than expected
“Many companies are increasing their loan loss provisions, which has caused some formerly profitable companies to become unprofitable. Other newly formed companies are still striving to break even,” analysts at S&P including Amy Martin said in a March 20 report.
Is this similar to a pyramid scheme?
The foundation for the loan (value of the vehicle) is a very poor investment, but initial investors may see a significant return on their investment, but as time passes those who buy this junk paper will find their investment lost because it never really existed.
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About the Author:
Diane L. Drain is a well known and respected Arizona bankruptcy attorney. She is an expert in both consumer bankruptcy and real estate laws. Since 1985 she has been a dedicated advocate for her clients and spokesperson for Arizona citizens. Diane is a professor of law and has taught bankruptcy for more than 20 years. As a teacher she believes in offering everyone, not just her clients, advice about the Arizona bankruptcy laws. She is also a mentor to hundreds of Arizona attorneys.Read More →
Connect with Diane on google+ *This article is available for educational purposes only and does not provide specific legal advice. By using this information, you understand that there is no attorney client relationship between you and me, and that this information should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state.*
The post Subprime Vehicle Loans are Skyrocketing appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
Robert Weed has the best rate of bankruptcy dismissed in Northern Virginia Just finished checking on the number of my law firm bankruptcy cases dismissed the first three months of this year. (“Dismissed” means thrown out; the opposite is “discharged” which means successfully completed.) We had 4 dismissals and 90 cases filed—that’s 4.4%. One […]The post Lowest rate of bankruptcy dismissed in Northern Virginia by Robert Weed appeared first on Robert Weed.
Robert Weed has the best rate of bankruptcy dismissed in Northern Virginia Just finished checking on the number of my law firm bankruptcy cases dismissed the first three months of this year. (“Dismissed” means thrown out; the opposite is “discharged” which means successfully completed.) We had 4 dismissals and 90 cases filed—that’s 4.4%. One […]
Robert Weed has the best rate of bankruptcy dismissed in Northern Virginia Just finished checking on the number of my law firm bankruptcy cases dismissed the first three months of this year. (“Dismissed” means thrown out; the opposite is “discharged” which means successfully completed.) We had 4 dismissals and 90 cases filed—that’s 4.4%. One […]
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Credit Reports to Exclude Certain Negative Information, Boosting FICO Credit Scores,
by AnnaMaria Andriotis at The Wall Street Journal
As a result of increasing pressure from Consumer Financial Protection Bureau and other regulatory concerns, the three major credit-reporting agencies are changing their standards for two pieces of negative information: tax liens and civil judgments. The promise is that sometime around summer of 2017 Equifax, Experian, and TransUnion will remove those data points from reports if they don’t include a person’s name, address, and either a Social Security number or date of birth. “Many liens and most judgments don’t include all three or four.”
It is expected that about 12 million people will see a slight increase to their credit score, typically of less than 20 points, but 700,000 people will get a rise of at least 40 points. “In many cases, that can mean the difference between getting approved for credit or denied it.”
LexisNexis estimated that 96% of public-record information about tax liens and 50% of information about civil judgments cannot be verified. LexisNexis Risk Solutions pulls tax lien and civil judgment information from the courts and the U.S. Internal Revenue Service and feeds it to the three credit bureaus. It also provides the same type of data directly to lenders.
“The three main credit-reporting firms jointly decided to make the changes. They did so as regulatory pressure has intensified in recent years around credit reports and the outsize role they typically play in lending decisions.”
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Last year, California-based clothing retailer Pacific Sunwear, better known by its shortened name PacSun, drastically reduced its debt from $88 million to just $30 million by giving stock to senior lender Golden Gate Capital as part of a Chapter 11 reorganization plan: a debt reduction of $58 million. Retail analyst Poonam Goyal was quoted in Bloomberg Markets as calling PacSun’s story “every distressed retailer’s dream.” If your business is undergoing financial hardship – or if you are a California resident whose debt exceeds the limits permitted for Chapter 13 – Chapter 11 may be able to help you substantially reduce the amount you owe various creditors while keeping your company afloat. Our Roseville Chapter 11 attorneys discuss who can file for Chapter 11 in California, how Chapter 11 works, and when it might make sense for an individual to file under Chapter 11.
Who Can File for Chapter 11 in California?
Chapter 11 is sometimes overlooked as a bankruptcy filing option among Californians, not only due to the complexity of the process, but also the rarity with which it is used compared to other chapters of bankruptcy. Among the 20,379 total bankruptcy filings in the U.S. Bankruptcy Court for the Eastern District of California during 2014, the vast majority involved Chapter 7 (16,652 total) or Chapter 13 (3,628 total), compared to just 84 Chapter 11 cases filed during the same time period. Phrased another way, Chapter 7 accounted for about 82% of the cases filed in 2014, while Chapter 13 accounted for 18%, and Chapter 11 accounted for less than 0.5%.
Chapter 11 is normally utilized by businesses, though in rare circumstances individuals may file under Chapter 11 as well. While most individual debtors are better served by Chapter 7 or Chapter 13, Chapter 11 may be appropriate for an individual filer if he or she has too much disposable income to file under Chapter 7, which is decided by a process called “means testing,” and has too much debt to file under Chapter 13. As of April 2016, under federal law an individual cannot file for Chapter 13 if his or her unsecured debts exceed $394,725, or if his or her secured debts exceed $1,184,200. These figures are periodically adjusted to account for inflation.
Chapter 11 is frequently utilized by business entities because they are prohibited from filing under Chapter 13, while filing under Chapter 7, which is permitted, will result in liquidation of the company’s assets. If a corporation, partnership, or limited liability company (LLC) wishes to avoid closure and remain operating throughout the bankruptcy, it is generally necessary to file under Chapter 11. Bankruptcy regulations are federal, meaning these rules apply not only to individuals and businesses in California, but throughout the United States.
What Happens to Debt in Chapter 11?
PacSun’s debt reduction was impressive, but pales in comparison to the Chapter 11 plan for oil and gas company Penn Virginia Corporation announced in mid-2016. According to a report in Law360, “Penn Virginia said that it has entered into a restructuring support agreement with creditors that hold approximately 87% of its funded debt obligations, about $1.03 billion.” While few filers are dealing with that level of debt, Chapter 11 can nonetheless result in substantial reductions to the amount the debtor owes.
Similar to Chapter 13, Chapter 11 is a reorganization bankruptcy in which the filer’s debts are restructured in accordance with a plan of reorganization. After the plan of reorganization is confirmed, most of the filer’s debts will be discharged. However, if the filer is an individual, no discharge will be granted until the debtor has made all payments provided for in the plan. The plan will not be confirmed by the bankruptcy court unless it is fair, feasible, and serves the best interests of the creditors involved.
Unlike a Chapter 13 or Chapter 7 bankruptcy, it is relatively uncommon for California bankruptcy courts to appoint a trustee to administer a Chapter 11 plan. In many though not all Chapter 11 cases, the debtor, who is called the “debtor in possession,” continues to run the business. However, the bankruptcy court will have discretion over any major decisions regarding the business, such as signing a lease, entering an agreement with a vendor, or expanding the business by opening more locations. A Chapter 11 case may conclude in as little as several months, but more typically takes several years to resolve.
Roseville Business Bankruptcy Lawyers Serving Sacramento and Folsom
Serving Roseville, Folsom, and Sacramento, the attorneys of The Bankruptcy Group have years of experience assisting businesses, individual filers, and married couples filing jointly for bankruptcy in California. Whether you are a small business owner thinking about Chapter 11 in Sacramento, a sole proprietor considering Chapter 13 In Folsom, or an individual who wishes to file under Chapter 7 in Roseville, our knowledgeable bankruptcy lawyers can help guide you through the process to maximize the efficiency of proceedings while protecting your interests and advising you of your options and their potential effects.
To speak confidentially in a free legal consultation with our Roseville Chapter 13 lawyers, Roseville Chapter 11 lawyers, or Roseville Chapter 7 lawyers, contact The Bankruptcy Group at (800) 920-5351 today.
The post Can Chapter 11 Reduce or Eliminate Debt for Businesses in California? appeared first on The Bankruptcy Group, P.C..
The Bankruptcy Code puts specific demands upon the debtor seeking to eliminate debt through a bankruptcy filing. It is important for clients to realize that these demands are inherent in the bankruptcy code and are not needless demands from their bankruptcy attorney. In many cases, debtors will wrongfully assume that the demand is coming from+ Read More
The post Requesting Documents Required For Filing Bankruptcy The Right Way appeared first on David M. Siegel.
In February, the FBI reported pastor Karl Robinson was sentenced to four years in federal prison for his role in a mortgage rescue scam that falsely promised California homeowners they could stop foreclosure and stay in their houses by paying fees for “experienced consultants.” Unfortunately for the victims of Robinson’s scam, his financial promises were too good to be true, and their money was wasted on useless, fraudulent services. However, there is a way to stop foreclosure that doesn’t involve empty promises or criminal activity: filing for Chapter 13 bankruptcy in California. Our Roseville Chapter 13 attorneys explain how filing under this chapter enables debtors in California to keep, and remain in, their homes.
Can You Keep Your House in a Chapter 13 Bankruptcy in CA?
The short answer to this question is yes: under the right circumstances, filing for Chapter 13 with strategic timing will allow the filer to retain his or her property and avoid being foreclosed on. The long answer, of course, is more detailed.
There are numerous chapters (types) of bankruptcy, but most Californians end up filing under Chapter 7, which involves liquidation of assets, or Chapter 13, which instead focuses on reorganization or creditor repayment. It is critical to emphasize that filing for Chapter 7 bankruptcy will not prevent foreclosure from occurring.
While a feature of Chapter 7 known as the “automatic stay” can postpone foreclosure, the proceedings will continue once the case is over. Moreover, there are circumstances under which a lender could conceivably persuade the bankruptcy court to lift the automatic stay, thus depriving the debtor of its protection. While Chapter 7 bankruptcy can be immensely beneficial for the right filer in that numerous debts are discharged after a short time period, it is generally not the ideal approach for homeowners concerned about foreclosure. An experienced Roseville Chapter 7 lawyer can help you understand how you would be affected by filing under various chapters, and which type of bankruptcy is right for your situation.
The only way to save your home from foreclosure through bankruptcy is by filing under Chapter 13. If you are a resident of Roseville, Folsom, or Sacramento, you will generally file your Chapter 13 petition with the Sacramento Division of the United States Bankruptcy Court for the Eastern District of California, which is located in the Robert T. Matsui United States Courthouse in downtown Sacramento, for a filing fee of $310 (which includes a $235 filing fee in addition to an administrative fee of $75).
But why does Chapter 13 stop foreclosure, while Chapter 7 doesn’t? The answer lies with the process involved in each type of bankruptcy.
When you file for Chapter 7 in California, most of your debts, including medical debt, credit card debt, and various debts arising from personal loans, can be quickly discharged provided you abide by all bankruptcy regulations and the rules of the bankruptcy court. This means you are no longer responsible for paying the discharged debts. However, a court official called a “trustee” will sell some of your property, excluding property you’ve protected using System 1 or System 2 of California’s bankruptcy exemptions. That doesn’t necessarily mean the trustee will sell your house, particularly if you have no equity; but keep in mind that, once the bankruptcy is over, the lender will still have a lien on your home, even though your liability for the mortgage has been eliminated. That means the lender can still foreclose on your home, despite the discharge you received from the bankruptcy court.
Chapter 13 works differently, and therefore, has a different impact on foreclosure proceedings. When a debtor declares Chapter 13 in California, he or she is required to propose a long-term reorganization plan, which essentially establishes a three- to five-year course of monthly payments that the filer will make toward his or her creditors, starting with secured creditors.
Significantly, you can catch up on mortgage arrears (also called “arrearages”) by making payments as part of your Chapter 13 plan. In other words, Chapter 13 gives the filer anywhere from three to five years, depending on his or her financial circumstances, to catch up on his or her missed mortgage payments. If you can remain current on your mortgage payments going forward, and make up for the payments you have missed, you can save your home from being foreclosed upon.
Contact Our Roseville Bankruptcy Lawyers About Stopping Foreclosure
If you’re a homeowner in Sacramento, Roseville, Folsom, or the surrounding communities, and you’re worried about losing your home to foreclosure, Chapter 13 bankruptcy may be able to help you stay in your house and keep your property. However, it is vital to act swiftly. The longer you wait to speak with an attorney about how to stop foreclosure in Roseville, the fewer legal options will remain open to you. To discuss Chapter 13 or Chapter 7 bankruptcy in a free and completely confidential legal consultation, contact The Bankruptcy Group at (800) 920-5351 today.
The post Can You Stop Foreclosure in Chapter 13 in California? appeared first on The Bankruptcy Group, P.C..
One of the oddities of Wynn at Law, LLC’s flow of phone calls is this: A potential client will call within seconds of getting a $180 speeding ticket, but will wait to call until well into buying a $300,000 home. The stakes are so much higher in the latter, and in fact, a real estate attorney on the front end can end up saving you money. Here are four ways how:
1. Wynn at Law, LLC reviews the title.
It’s a history project that reveals covenants on the property, environmental concerns (like our Geneva Lake Watershed), and liens. Any one of these can be costly to the buyer well after the closing.
2. Home Owner Associations
When there’s a Home Owner Association (HOA) it can have a lasting impact on your happiness with your investment. One area of completely subjective info a seller has to his advantage is his opinion of the HOA. “They’re great.” “They’re harmless.” If the HOA was terrible, would they really tell you and possibly scuttle the sale? I look at the more objective – and legally binding – HOA rules before any contract ties you to them. A sale contract most definitely will.
3. Buyers sometimes want out of a contract.
If you haven’t engaged an attorney before the offer, you might not have protected your ‘out.’ Sellers have the upper hand from engaging an attorney before listing, or at least by using the real estate agent’s legal contract. If the buyer doesn’t have the offer prepared properly and the contract drawn up in his/her best interest, that’s a legal cliff. You’ll either close, or buy your way out of the deal. But…
4. A seller may call his/her attorney.
A suit follows. Even if they’re not unanimously successful, but they are an expensive time-eater.
When we get the chance to work with homebuyers early in the home-buying process, they’re excited people. And you should be: This is a great life changer.
When I work with them later in the life-changing deal once it has gone south, it’s usually because they’re ticked-off with the seller.
Who doesn’t prefer working with happy clients? But more importantly, they’re going to avoid costly mistakes. That’s part of the reward in which we can all share.
*The content and material in this original post is for informational purposes only and does not constitute legal advice.
Photo by Syda Productions, Lev Dolgachov, used with permission.
The post Get your real estate lawyer sooner appeared first on Wynn at Law, LLC.
Last month, a California-based adoption agency closed its doors after filing for Chapter 7 bankruptcy. Unfortunately for nearly 2,000 hopeful adoptive parents – many of whom had already sunk tens of thousands of dollars into the adoption process – the agency arguably failed to prepare its clients, instead surprising families with last-minute email notifications. Whether it is a corporation, an LLC, or other type of business entity, every company should take steps to avoid this situation by preparing for Chapter 7 and subsequent closure well in advance of filing. In order to help companies prepare for Chapter 7, our Roseville Chapter 7 bankruptcy lawyers have compiled a short business bankruptcy checklist for closing a business in California.
Types of Business Bankruptcy in CA
The vast majority of bankruptcies in California fall into one of the following categories:
- Chapter 7 (Liquidation)
- Chapter 11 (Reorganization)
- Chapter 13 (Reorganization, Wage Earner’s Plan)
Business entities may not file for bankruptcy under Chapter 13, which is prohibited by 11 U.S. Code § 109(e). It is only possible to file Chapter 13 bankruptcy in California if you are filing as an individual, or filing jointly with your spouse. However, with assistance from a Roseville Chapter 13 attorney, sole proprietors may wish to utilize Chapter 13 in certain situations. C corporations, S corporations, limited liability companies, and other California business entities essentially have two filing options under federal law: file under Chapter 7, or file under Chapter 11.
Though both forms of bankruptcy may be utilized by businesses, they involve drastically different criteria and procedures – and likewise, result in drastically different outcomes. While the full explanation is more nuanced, the short explanation is that Chapter 7 is a liquidation in which a trustee sells the company’s assets and the business typically closes. Chapter 11 costs more and takes a longer time to complete, but allows the company to retain its assets and continue operating. Our Roseville Chapter 11 attorneys assist clients with both types of business bankruptcy, and are happy to answer your questions about either during a free consultation.
Chapter 7 Checklist for Businesses: Steps Before Closing
By making sure to take certain steps when filing for bankruptcy in California, you can spare your customers, your employees, and yourself avoidable headaches.
- Hire a California bankruptcy lawyer. Bankruptcy is a complex procedure, particularly if you are filing under Chapter 11, that will have a long-lasting financial impact on your liability for both personal and business debts. It is in your best interests to consult with an attorney, who, in addition to handling your legal documentation and making sure you understand your rights and responsibilities as a debtor, will also work to ensure that your case is filed with strategic timing using the chapter best suited to your objectives.
- Notify your employees. Your employees will need as much time as possible to prepare themselves for the loss of income and to seek a new job.
- Collect accounts receivable. Try to collect as much of the money that is still owed to the company as possible. It’s a good idea to do this prior to announcing closure of the company, and in some cases, may be helpful to offer a small discount as a way of encouraging customers to pay right away. You can also raise money before closing your business by holding a going-out-of-business sale.
- Notify your customers. Make sure your customers receive plenty of notice that the company will be going out of business. For example, you can issue a press release or contact local newspapers about publishing a statement. Even though the company will cease operations, it never hurts to leave a positive impression – especially because you may decide to open a new business later, after the case is closed. Make a good faith effort to wrap up any transactions or contractual obligations you’re committed to, and speak with an attorney immediately about how to handle refunds, project cancellations, and any other unfulfilled provisions of a contract.
- Submit paperwork and tax returns. After you’ve sent the final payments out to your employees, you’ll be required to file various state and federal employment tax forms, in addition to your final tax return. An attorney can help you understand which forms need to be submitted to the IRS, and by which deadlines, in order for you to fulfill your financial obligations.
CA Bankruptcy Lawyers in Roseville, Folsom, and Sacramento
The experienced California bankruptcy attorneys of The Bankruptcy Group provide an array of bankruptcy legal services for corporations, partnerships, LLCs, and sole proprietors, ranging from small family-owned businesses to large franchises with thousands of employees. If you are a business owner who is thinking about filing for Chapter 7, Chapter 11, or Chapter 13 in California, make sure you discuss your legal options with our bankruptcy lawyers before you initiate the filing process. For a free legal consultation with The Bankruptcy Group, call our law offices at (800) 920-5351 today.
The post What to Do Before Your Business Files for Chapter 7 Bankruptcy in California appeared first on The Bankruptcy Group, P.C..
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.