San Francisco Bankruptcy Lawyer Blog

New data from the credit bureau TransUnion indicates a clear link between credit card delinquency rates and foreclosure rates nationwide. The results highlight both economic distress and the ways in which individual consumers seem to be coping with the threat of bankruptcy.

The good news is that credit card delinquencies were down six percent during the third quarter of this year, according to an analysis of the data at eCreditDaily. Delinquencies are highest in Nevada, Florida, Arizona and California (in that order). Together, the website notes, those four states also accounted for 43 percent of all foreclosures nationwide during the same period. TransUnion also reports a drop in the national savings rate during the same period, even as the average total credit card debt held by US households also edged down slightly. Taken together, all of this data implies that many people are focusing on paying down debt in a bid to stay afloat financially.

When faced with financial difficulties consultation with a Bay Area bankruptcy lawyer can be a useful step toward getting your affairs in order. Many consumers think of a bankruptcy lawyer as someone to file court papers and help with a financial reorganization plan, but a full-service Walnut Creek bankruptcy law firm can also offer advice on loan modifications and with the renegotiation of credit card debt and other ways to avoid a California bankruptcy.

At a time when consumers are being more cautious and shopping around for the best deals, taking the time to consider all of your financial options makes more sense than ever.

eCreditDaily: Credit Card Delinquencies Highest in Foreclosure Hit States

A story earlier this week in the Los Angeles Times highlights some of the longer-term implications of California bankruptcy. United Airlines filed for Chapter 11 bankruptcy in December 2002, and remained in bankruptcy for three and a half years. Though the airline has been operating 'normally' for almost four years it is, as the article details, still working to undo the resulting damage to its reputation.

Of course, the airline industry has had an especially hard decade, but United's experience is a good reminder that bankruptcy is not the quick and easy solution often portrayed by the media and popular culture. Filing for California Chapter 11, California Chapter 13 or California Chapter 7 bankruptcy is usually only the first step in a lengthy, complex and emotionally stressful process. It is for this reason that bankruptcy is not to be undertaken lightly, and why it should always be managed in partnership with a skilled Northern California bankruptcy law firm.

The LA Times recounts how United, in initially focusing on relentless cost-cutting, damaged a reputation for customer service that had been built up over several decades and had long been what differentiated it from other major air carriers. Though now once again operating in the black, United now finds itself forced to invest enormous sums of money in revamping its airplanes and airport lounges and combating a relatively-new reputation for bad service.

The lesson for Northern California companies considering bankruptcy is not to avoid the process - sometimes bankruptcy is necessary. Rather, it is that the process needs to be thought through and managed carefully, so that rebuilding your business' financial base does not unduly damage your business' reputation.

A full-service San Francisco bankruptcy attorney can be a valuable ally in this process, including an initial consideration of whether a Bay Area loan modification or some other measure short of an actual declaration of San Francisco bankruptcy might be a better approach in your particular circumstances.

Los Angeles Times: United Airlines tries to fix its reputation

A sign of the times: people are walking away from mortgages, voluntarily putting properties into foreclosure despite having good jobs and good credit. California foreclosures remain among the highest in the nation, according to a recent report at eCreditDaily, and so-called "underwater" mortgages (mortgages worth more than the property they were written against) remain among the biggest problems. Before voluntarily destroying your credit rating, however, a few hours spent with a Fairfield loan modification lawyer is an excellent investment of time and funds as you sort out your options and contemplate this important decision.

In contrast to the common image of a housing bubble driven by sub-prime borrowers, the eCreditDaily report cites new data from the Mortgage Bankers' Association that indicates around one-third of all foreclosures in the third quarter of this year were on homeowners with prime, fixed-rate loans. Such borrowers also accounted for 44 percent of the year-on-year increase in foreclosures.

Of course, getting in over one's head is hardly restricted to the poor or the financially unsophisticated. During the housing boom more than a few well-off people bought more house than they could really afford. Many assumed prices would always go up, allowing a series of rolling refinancings to keep them in the black. In other cases people with apparently solid credit and good, fixed-rate loans may be walking away from properties because they have recently lost a job and know they will not be able to make payments a few weeks or months down the line.

Abandoning a mortgage far higher than a property is now worth may seem sensible in certain circumstances; but before walking away and taking the hit to one's credit rating it makes sense to see a full-service Bay Area bankruptcy law firm to explore other options, including loan modifications. This is particularly the case when one considers that damage to a credit score can take many years to undo. As the MBA data indicate, Northern California foreclosures are among the worst in the nation. Taking time to examine your options before adding your own name to the list is a prudent first step toward easing one's financial pain.

eCreditDaily: Foreclosures: Those with good credit, jobs are walking away

Not the nicest news to receive on Thanksgiving Weekend, perhaps, but new data released this week indicates that bankruptcies nationwide spiked 33 percent in the third quarter of this year. California bankruptcies remain a significant part of the problem, as the state remains one of the nation's leaders in this area, an unhappy reality for anyone facing a Bay Area foreclosure.

According to media reports, the American Bankruptcy Institute released data yesterday indicating that 388,485 there were bankruptcy filings between July 1 and September 30, up from 292,291 in the same period last year. "The spike in bankruptcy filings for both consumers and businesses reflect the continuing effects of today's weak economy," said ABI executive director Samuel Gerdano, according to CNN.

According to an analysis by the Reuter News Agency, approximately 71 percent of the third-quarter filings were made under Chapter 7 of the US bankruptcy code and 28 percent under chapter 13. Most of the remainder of the filings used chapter 11. Nevada led the nation in filings per capita with California ranked 13th.

In troubled and unsettled times such as these it is more important than ever to develop a relationship with a full-service Oakland, Walnut Creek and San Francisco bankruptcy law firm. Early consultation with a Bay Area bankruptcy attorney can help avoid worse problems in the future. If the attorney can help arrange a California loan modification it may be possible to avoid bankruptcy entirely.

Reuters: U.S. bankruptcies rise 33 percent in third quarter

CNNMoney: Bankruptcies spike 33%

A report in USA Today details a new study focusing on the middle class and the bankruptcy crisis. As I have noted in earlier blogs, California chapter 7 bankruptcies have been among the worst in the country. The article, and the study data it cites, leave the impression that across the country this trend is getting worse.

The focus of the article is a study by Elizabeth Warren of Harvard Law School and Deborah Thorne of Ohio University (since the research was done Warren has left Harvard to run the congressional panel that oversees the administration of the TARP bailout funds), which the authors intend to publish as a book next year. It notes that there were well over a million Chapter 7 bankruptcy filings by individuals in both 2007 and 2008, and that this year the number looks certain to pass 1.5 million.

These numbers are huge, and growing, despite changes to the bankruptcy laws enacted in 2005 that made declaring California chapter 7 bankruptcy harder. Significantly, the study shows that more and more well-educated, middle class people are finding themselves in financial difficulties. According to USA Today the proportion of bankruptcy filers who have a college education rose from 46.5% in 1991 to 58.9% in 2007.

In situations like this the services of an experienced Bay Area chapter 7 bankruptcy lawyer are more critical than ever. A full-service Northern California bankruptcy and loan modification attorney can advise on whether this significant step is the correct one for you, ensuring that paperwork is handled quickly and correctly to give you the best chance of holding onto your home.

USA Today: More members of middle class file for bankruptcy

Plans to sell the foreclosed properties of a San Luis Obispo wine tycoon on the courthouse steps were put on hold at the last minute yesterday. The development illustrates how tricky California bankruptcies and California foreclosure procedures can be throughout the lengthy legal process of bankruptcy.

David Weyrich's foreclosed assets include three different wineries and more than 500 acres of vineyards, all in and around Paso Robles, as well as a luxury B&B and two wine tasting rooms. The assets were put up as collateral on $20 million in loans Weyrich took from TransAmerica Financial Life Insurance Company, according to a report in the San Luis Obispo Tribune.

According to the newspaper, on Friday TransAmerica's parent company, Aegon, informed the auctioneer at the last minute that it would be postponing the sale until next Tuesday. Aegon offered no explanation, but following the move there has been speculation that the postponement may mean a deal is in the works for the private sale of some or all of Weyrich's assets.

California foreclosure and California business liquidation are lengthy and complex legal processes that can involve any number of unexpected legal twists and turns. An experienced Northern California bankruptcy lawyer can be an indispensable guide to the process, helping clients determine the best way to preserve whatever can be preserved of their home, business or businesses and other assets. An auction on the courthouse steps should always be the last possible option.

San Luis Obispo Tribune: Weyrich auction delayed until Tuesday

Depending on how you look at it, the latest wave of October California home foreclosure data might, or might not, signal good news for the broader economy. According to the widely-watched RealtyTrac index, October foreclosure filings totaled 332,292 nationwide, with California's home foreclosure rate remaining among the worst in the country.

How is this good news? As USA Today notes the October number, as bad as it is, actually represents a 3 percent drop compared to September (it is up 19% compared to October of last year, but since that was the moment at which the financial crisis really kicked into overdrive, October 2008 might not be the best yardstick by which to measure progress).

So things are getting better, even if only a little. Right? Well, Bloomberg looks at the same data and reaches a somewhat different conclusion. Their report's headline says it all: "U.S. foreclosure filings surpass 300,000 for 8th straight month."

Whether you see the glass as half-empty or half-full, it is worth noting that RealtyTrac still lists seven California metro areas in the nationwide top-10 for foreclosures, including Vallejo-Fairfield and the Sacramento area.

This sort of unclear economic news serves as a reminder of the important services a Fairfield loan modification lawyer can offer homeowners trying to stave off Northern California foreclosure proceedings. A full-service Solano County and Contra Costa County foreclosure prevention attorney can be an indispensible ally as you battle unsympathetic lenders and a complex and confusing court system. As the data indicates, East Bay foreclosures and Sacramento foreclosures have been among the highest in the nation. Times like these require the assistance of an experienced Northern California foreclosure law specialist.

Bloomberg: U.S. foreclosure filings surpass 300,000 for 8th straight month

USA Today: 3rd drop in foreclosures hints at recovery

Nine months after its launch the government's "Making Home Affordable" program has reached significant numbers of homeowners in danger of a California foreclosure, offering them help with California mortgage loan modifications, according to recent media reports and new data from the Treasury Department. The Washington Post reports, however, that the program's long-term success rate remains unclear. It is simply too soon to say how many California homeowners will still lose their homes.

Treasury Department data cited by the Post and the Associated Press indicates that of the nearly 651,000 people enrolled in the program nationwide more than 20% - 134,609 - are homeowners seeking California loan modifications. The program pays lenders to lower the mortgage payments of homeowners who are in financial distress, usually by cutting their interest rate. The government says that about 20% of eligible homeowners nationwide are currently enrolled in the program.

In its early stages, however, the program has been plagued with problems. Because of the way Wall Street repeatedly re-packaged and re-sold groups of mortgages in the run-up to the financial crisis it can often be difficult to determine who, exactly, owns a particular note. This is where, in addition to the government's services, the assistance of an experienced Bay Area loan modification lawyer can be crucial for Northern California homeowners struggling to make their payments.

A San Francisco area foreclosure prevention law firm can help distressed homeowners facing California foreclosure navigate the complexities of Making Home Affordable and other government programs. Bay Area foreclosure prevention is a difficult and emotional process. A trusted legal advisor can be an invaluable part of any effort to keep your home.

AP: Housing plan helps 20 pct in Calif., Nev., Ariz.

Washington Post: U.S. foreclosure program helping more people, but how much is still unclear

Resources:
Treasury Department press release on the latest "Making Home Affordable" Data

Last week's San Francisco chapter 11 bankruptcy of high-end clothing retailer Wilkes Bashford is emerging as an example of how the bankruptcy code can help to save a small business. According to a report in the San Francisco Chronicle, the 43-year old business is to be sold and reorganized as part of its San Francisco bankruptcy and intends to remain open to its customers throughout the process.

Wilkes Bashford is a boutique operation, catering to the sort of people who are willing to spend thousands of dollars on a single dress or pair of pants. It has been built on personal relationships between the owner and his staff on one hand, and their small but loyal clientele on the other. The city's famously well-dressed former mayor, Willie Brown, told the Chronicle the news that Wilkes Bashford's will remain open despite its San Francisco bankruptcy is "a relief for all of us who will have no other place in town to buy clothes."

According to media reports, Wilkes Bashford is to be purchased by an East Coast company that deals in the same sort of high end clothing. The new owners reportedly believe that more modern record-keeping and inventory management can make Wilkes Bashford profitable again.

As this story indicates, San Francisco bankruptcy can mean more than a simple choice between reorganization and liquidation. In distressed economic times the assistance of an experienced San Francisco bankruptcy lawyer can mean the difference between saving and losing a business. A full-service Bay Area bankruptcy law firm can walk you through the different sections of the bankruptcy code, and can help to determine the best way forward given your particular circumstances.

San Francisco Chronicle: S.F. clothier Wilkes Bashford sold, to stay open

KGO-TV: Wilkes Bashford files for bankruptcy

Newly released data from the American Bankruptcy Institute confirms the anecdotal evidence: Chapter 13 bankruptcies continue to rise here in California and nationwide. The California Chapter 13 bankruptcy trend is part of a broader nationwide rise in Chapter 13 bankruptcy filings over the last year. The lesson from all this? Bay Area Chapter 13 Bankruptcy lawyers will continue to be busy in the weeks and months ahead as they work to help clients manage these difficult economic times.

If, as ABI forecasts, bankruptcies nationwide exceed 1.4 million this year that would make 2009 the worst year for bankruptcy filings since 2005. The Institute's newly released data for October indicate that there were 135,913 filings last month - a 8.9% increase compared with September and up a full 27.9% over October of 2008. The report notes that Chapter 13 filings made up 28.5% of the October total, which it describes as "a slight increase" on the September rate.

An analysis at Credit.com points out that much of this increase can be linked to the unemployment rate, which has slowed its rise in recent months but remains at levels not seen since the Reagan administration.

As I've noted in previous posts, Northern California Bankruptcies represent a significant share of the overall California Chapter 13 bankruptcy trend. An experienced Northern California Chapter 13 bankruptcy law firm can be a key ally in managing this particularly complicated legal territory. Contra Costa County Chapter 13 bankruptcy can affect credit ratings and many other aspects of your life. Experience, sensitivity and attention to detail are all key factors you should consider in selecting a San Francisco area Chapter 13 bankruptcy lawyer.

Credit.com: Bankruptcy state raise questions about recovery

American Bankruptcy Institute Press Release on new data

Newspapers and TV may be filled with hopeful reports about the first signs of a nationwide recovery, but a new economic analysis suggests more distress may still be in store for California homeowners. California foreclosures may not have peaked yet, according to an analysis by the Center for Responsible Lending. California foreclosure prevention lawyers are likely to have their work cut out for them in the coming year, according to the CRL analysis, as reported in the Central Valley Business Times.

The report cites "record levels of unemployment, record levels of mortgage delinquencies, and precipitous declines in housing values as precursors to a further deepening of the state's economy," the newspaper said. It also speaks of over one million California mortgage foreclosures "looming".

The idea that little relief from the long economic downturn may be in store for California homeowners is sure to seem daunting. If this report is correct, California foreclosure prevention is likely to become even harder than it already is. The report identifies parts of the Central Valley, especially Stockton and Modesto, as the hardest hit portions of California, but there is no denying that Bay Area foreclosures and Contra Costa County foreclosures remain among the most serious in the state.

An experienced California foreclosure prevention law firm can and should be a key ally in the fight to save your home. A full-service Bay Area foreclosure specialist will also be well-versed in bankruptcy law and other aspects of the legal system that often go along with foreclosure prevention. As what the CRL report calls "the spiral of bad news" continues, a Northern California foreclosure attorney's advice and help can be one of the best investments available.

Central Valley Business Times: Report: Looming foreclosure wave will derail recession recovery in California

The ongoing California mortgage and foreclosure crisis was back in the news last week with word that troubled mortgage giant Fannie Mae is seeking a further $15 billion in financial lifelines from the government. The latest government assistance will mean Fannie Mae has used $60 billion of the $200 billion government-sponsored line-of-credit it was extended at the height of last year's financial industry collapse.

An analysis published by Bloomberg Business News notes that Fannie Mae owns or guarantees one-fifth of the entire US mortgage market. The mortgage giant's troubles are among the most visible aspects of a California mortgage crisis that continues to make the Golden State one of the hardest hit regions of the country.

For individual Walnut Creek mortgage consumers Fannie Mae's latest troubles are a reminder that when mortgage lenders themselves are struggling to survive it can be even harder than usual to grab their attention with one's own problems. A Contra Costa County foreclosure prevention lawyer can be a key ally at difficult times like these, offering advice on the best strategies for dealing with troubled California lenders when you are fighting to save your home.

Bay Area foreclosure prevention can be a complex and challenging legal process. Enlisting the help of a Northern California bankruptcy law firm with the broad expertise required to assist in California foreclosure prevention can be a key element of your successful battle to keep your house.

Marketwatch: Fannie Mae asks for $15 billion in additional funding

Bloomberg: Fannie Mae posts loss, plans to sell tax credits

New York Times: Administration Rejects Plan to Buy Fannie Mae Credits

A follow-up to my Bay Area Chapter 11 bankruptcy post earlier this week about the pre-packaged Chapter 11 bankruptcy of CIT, a huge, century-old commercial lender: The Sacramento Bee reports that CIT's Chapter 11 bankruptcy may have an impact in Northern California. The paper reports that CIT has two offices in the Sacramento area, where it "is a leading lender to the retail sector and to women- minority- and veteran-owned small businesses."

It is exactly this 'ripple effect' that can make a bankruptcy filing by a large company like CIT so problematic. Even if CIT does manage to keep its day-to-day operations running normally, the effect on small businesses in the region could be significant, forcing some companies to consider their own California bankruptcy moves. The assistance of a Bay Area bankruptcy lawyer who knows that every situation is unique and requires personal attention is crucial for any company that may fear the emergence of this sort of situation.

CIT is the nation's largest "factor" - a specialized type of lender focusing on the retail sector. Factors lend retailers the cash they need to manage their inventories. A spokesman for the National Retail Federation told Bloomberg News that many businesses "dodged a bullet" in the case of CIT, noting that the company's Chapter 11 bankruptcy filing came late enough in the year that most retailers already have their holiday merchandise in stock.

CIT arranged what is known as a "pre-packaged" bankruptcy, in which a company presents the court with a full reorganization plan at the same time that it files for bankruptcy. These are not the most common types of bankruptcy filings, but may be worth considering for some businesses. An experienced San Francisco bankruptcy lawyer can offer more insight on when a "pre-packaged" bankruptcy may be appropriate. CIT says its business operations will continue uninterrupted, but the Bee expressed some doubts, calling the situation for smaller Northern California retailers "worrisome" in the wake of the CIT filing.

There are a number of reasons why a Bay Area company may consider Chapter 11 bankruptcy, which allows for corporate reorganization. Extreme cases may require exploring liquidation as part of a Northern California Chapter 7 bankruptcy filing. A Northern California bankruptcy lawyer is your best source of information and advice concerning the different chapters of the bankruptcy code.

Sacramento Bee: CIT filing may tighten credit for Sacramento-area small firms

Bloomberg: Retailers 'dodge bullet' with CIT's November filing

A loan and foreclosure company in Paso Robles has been forced into California chapter 7 bankruptcy. The San Luis Obispo Tribune quoted a letter from company president Candy Wells which explained that Heritage Lending and the associated HL Foreclosure Services felt they had no choice but to declare California Chapter 7 bankruptcy and liquidate after an unsuccessful business deal led to a lawsuit charging breach of contract, fraud and negligence.

The newspaper quoted Wells saying the company's lawyers believed Heritage could win the case in court, but the company felt it lacked the resources for a trial. Heritage, founded in 1999, was what is known as a 'hard money lender' - a company specializing in pooling investors' money and lending it out at high interest rates to clients having trouble finding financing elsewhere. Many of Heritage's clients were reportedly real estate developers, leaving the company particularly exposed to the possibility of California bankruptcy when the current housing crisis took hold.

California chapter 7 bankruptcy is a complex legal procedure leading to the liquidation of a company. An experienced California Chapter 7 bankruptcy attorney is essential as a guide through the process, particularly the tricky question of what property or assets are "exempt", and therefore not subject to liquidation.

Before deciding on a Chapter 7 bankruptcy consulting with a California bankruptcy lawyer is essential. A skilled California bankruptcy attorney can help determine if this dramatic step best fits your circumstances, or whether other avenues may still be open to you and your company.

San Luis Obispo Tribune: Paso Lender Falls into Bankruptcy

US Federal Court System Website: Chapter 7 Bankruptcy

New data released this week by Equifax shows that Northern California remains particularly vulnerable to small business bankruptcies. Three Northern California areas made the top 15 among the country's hardest hit small business bankruptcy regions during September: Sacramento, Oakland-Fremont-Hayward and the San Jose-Sunnyvale area of Silicon Valley.

Overall, California cities or regions occupy seven of those top 15 slots, spotlighting the degree to which California small business bankruptcy remains a difficult problem. Sacramento small business bankruptcy activity earned the state capital the number three spot on the list. Oakland was 10th and San Jose-Sunnyvale 14th.

A press release from Atlanta-based Equifax, which compiled the data, noted that, nationwide, the September 2009 numbers represent a 27% increase in small business bankruptcy filings from the same month a year ago: 9361 filings, versus 7386 in September 2008. Equifax analyzed Chapter 7 bankruptcy filings, Chapter 13 bankruptcy filings and Chapter 11 bankruptcy filings.

These unpleasant economic numbers are a reminder of the important role a Northern California bankruptcy attorney should have in your financial planning. Consulting an experienced Oakland bankruptcy lawyer, Contra Costa County bankruptcy lawyer or San Francisco bankruptcy lawyer is a key step not only in initiating the bankruptcy process, but in managing it with the goal of making the process run as smoothly as possible.

Equifax Press Release

Sunday's Chapter 11 filing by CIT Group offers a lesson in the role psychology plays when a company files for bankruptcy. CIT filed its bankruptcy petition in Manhattan, but its example is applicable to companies considering a California bankruptcy in Contra Costa County, San Francisco, Alameda County or elsewhere in the Bay Area.

According to an item posted on the New York Times' website Sunday afternoon, century-old lender CIT hopes to reemerge as a viable company via a so-called "pre-packaged" chapter 11 bankruptcy. The paper noted that this will make CIT the first large financial company to default on federal bail-out funds received last year. CIT, the Times reports, was the nation's largest "factor", a specialized type of lender supplying the cash flows on which retailers depend.

Companies of all types regularly use Chapter 11 bankruptcy to create a 'breathing space' in which they can reorganize and return to profitability. Conventional wisdom has long held, however, that lenders are different. A lender's viability is closely tied to confidence in the company, since few people are willing to borrow money from a bankrupt company.

For Bay Area businesses considering bankruptcy the lesson is clear: psychology - confidence - plays an important role in the path a company in San Francisco bankruptcy must follow to get back to profitability. An experienced Northern California bankruptcy attorney will not only guide you through the legal complexities of the California bankruptcy process, but can advise on the best ways to demonstrate the confidence your clients need to see as they decide whether to continue doing business with a firm in Chapter 11.

In CIT's case, for example, the Times reports that the company hopes to inspire confidence by entering a so-called "pre-packaged" bankruptcy, in which a court is asked to approve a reorganization plan at the same time that the company files Chapter 11. If this works it should allow CIT to emerge from bankruptcy much faster than might otherwise be the case. A San Francisco bankruptcy lawyer can advise whether a similar solution might work for you.

New York Times: CIT Files for Bankruptcy