Arizona Bankruptcy Attorney Blog: Chapter 7, 13, 11, 12, by AZ Bankruptcy Lawyer Joseph C. McDaniel

Atheism Good for Business? Why I Love the United States.

2011-05-18T08:48:00.000-07:00

One thing about people in the United States: even though we're knee-deep in a depression, with bankruptcy cases to the right of us and the left of us, we're looking hard for the next business niche that promises brisk business.

On the one hand, it's made me a little nervous that Costco has been selling lots of survival food (did everyone get the memo but me?) to people who are concerned that our just-in-time inventory system is especially bad at handling disruptions.

But a recent news article told me that we would, as a country, go down swinging, and maybe even survive.

This story takes a moment for the set-up, but it's worth the wait.

See, the vast majority of folks in the United States are Christians of some flavor or another, according to the CIA Factbook. And Christians are either fairly much like each other in their beliefs (Catholics tend to believe in, well, Doctrine, right?) or very different from one another in their beliefs.

Remember, when people came to the United States, there were some places established to permit freedom to worship Jehovah in a particular way, and those places tended to have folks who all believed in similar ways.

Other places in the United States were settled by folks who had very little in the way of possessions, except their family Bible, and who didn't have a lot of ministers or priests with 'em, and religion in those areas developed in ways that were sometimes different (Snake Handlers are a relatively small percentage of Christians in the United States today, for instance) from mainstream Churches.

Putting it another way, there is a wide divergence of belief among Christians in the United States today.

Some believe, for instance, that folks will be lifted bodily into heaven, and that it will happen very soon.

That is a belief that has been a part of Christian belief for as long as Christians have existed; lately it's been called "The Rapture".

Many Christians work on the principle that it'll sneak up on us like a thief in the night, and we'll be called to Judgment at a point that we never expected. Because a lot of generations expected the Second Coming any day now, and some of those were disappointed.

But now a new industry has been established to serve the needs of a sub-population of Christians who believe that The Rapture is coming, and you ought not buy any long-playing albums, because you might be wasting your money!

That industry? Pet care by atheists, for Christians who expect to be bodily lifted up in the near future. After all, if Christians are going to be lifted up and away, their pets might stick around. And atheists, obviously, aren't going to be going home, because it's not their home! So they'll be around to take care of Fido, or Fluffy!

You gotta love the United States; this could not happen in China.

The Bankruptcy of Iceland, and Why the Men are so Brave, and the Women so Beautiful

2011-05-17T14:25:00.001-07:00

There is an interesting article about the rise and fall of the Icelandic Economy in the New York Times.

While the discussions of bankers getting rich and banks then failing are familiar, I was more interested in the life after bankruptcy aspect of the story.

And especially in the genetic and historical explanation of the brave men and beautiful women of Iceland; everybody named any variation of "Mick" will smile.

Fewer Small Business Bankruptcy Cases Because there's Cheap Insurance for Them?

2011-05-17T07:55:00.000-07:00

Small businesses file bankruptcy (or just close the doors, and let the owners file bankruptcy) for a lot of reasons.

The most common is under-capitalization, and the second is bad luck. Like the city deciding to tear up the street in front of your store for six months.

But high overhead makes any bad luck badder, because the business has a higher "burn rate".

Now, I just read an article suggesting that some small biz owners can now buy into an insurance package of the sort formerly available only to big business owners.

Maybe it's wonderful, maybe it's lousy.

And I don't get a commission for telling you about it.

But if it lowers overhead for some small businesses, and their employees stay working because the business owner didn't have to file a bankruptcy because of excessive overhead, that would make me happy.

This is my happy face.

See?

Zimbabwe Worried About the U.S. Dollar

2011-05-16T17:05:00.002-07:00

You know Zimbabwe, right?

It's the country that printed so much paper money that it became worthless.

But Zimbabwe was much more considerate than the Weimar Republic, which forced its citizens to use wheelbarrows to get money to the grocery store.

Zimbabwe issued bills of greater and greater denomination, and now has a 100 Trillion Dollar Bill!

Now, Zimbabwe has a new concern, and that concern is that U.S. money may become worthless because we're printing so much of it.

Hey, Zimbabwe oughta know, right?

And in a public statement, public officials in Zimbabwe have said that the "days of the U.S. dollar as the world's reserve currency are numbered."

Green Energy Will Stop This Depression, and Fix the Economy!

2011-05-16T15:17:00.001-07:00

Do you think?

Westrim Crafts Files Bankruptcy

2011-05-16T09:03:00.001-07:00

A company that sold craft supplies to Walmart and Jo-Ann has filed bankruptcy: Westrim Crafts.

Their sales had dropped from about $125,000,000 to $30,000,000 over a five-year period prior to the decision to file a Chapter 11 Bankruptcy.

And that's a pretty steep drop!

Most Indebted Graduating Class. Ever.

2011-05-15T20:53:00.003-07:00

So just which wonderful jobs can the class of 2011 look forward to snagging, so it can pay its student loans?

Yeah.

And that makes me sad. Because, in general, the Bankruptcy Code is not useful as a tool for discharging student loans.

It can be done, and I've done it for a few clients.

But you wouldn't want to be them. They had it rough!

p.s. I didn't add this sentence from the article about the most indebted class ever, and I should have: " The Collegiate Employment Research Institute estimates that the average salary for holders of new bachelor degrees will be $36,866 this year, down from $46,500 in 2009." That average conceals the fact that for many new graduates, there are simply no jobs at all.

So Do You Think the RICHEST Nation in the World Can Spend Itself Bankrupt?

2011-05-15T20:40:00.001-07:00

The bail-out of Greece has failed, and the suffering there mirrors the sort of job loss-induced, price-increase-fueled and mortgage foreclosure-related suffering here in the United States.

This is a bad sign for our future.

Greece was the 28th richest country in the world.

And I keep hoping that the collapse of Greece's economy is not a prediction for the United States in a year.

Sex Scandal for International Monetary Fund Will Result in...What?

2011-05-15T17:34:00.000-07:00

The Euro is weaker because the head of the International Monetary Fund is accused of "attempted rape, criminal sexual assault and unlawful imprisonment".

Now, I know I'm naive, but I'd think that a guy smart enough to run the IMF would also be smart enough to avoid imprisoning the maid.

But I guess I'm just old-fashioned.

Enjoy reading about vastly expensive houses being purchased here in the United States!

By local folks?

Not so much.

I Don't Have to List Charged-off Debts in My Bankruptcy, Do I?

2011-05-11T10:03:00.000-07:00

Uh. Yes. Heck yes. Heck yes with exclamation points.

I know that hope springs eternal in the human breast, but it's a bad idea to leave any debt, of any sort, off of your bankruptcy petition and schedules. If a creditor doesn't get actual notice by the drop dead date, that creditor may well not be affected by your Bankruptcy Discharge Order.

And if all of your other debts have been discharged, there's more available to that creditor when he sues you and garnishes you and liens your house. And that doesn't count the debtor's exam, which is less fun than a root canal!

And "charged off" doesn't mean you won't be sued on that debt; it's just an internal accounting phrase used by banks, and it has some bearing on how much money a bank can loan. It has no bearing on whether the bank can, or will, sue you.

Purchases To Make with Your Credit Card; Just Not Within 90 Days of Your Bankruptcy!

2011-05-10T15:31:00.001-07:00

I ran into an article indicating that there are benefits to be had if you charge some kinds of transactions on your plastic.

Remember, though: don't charge things on your credit cards within 90 days of filing your bankruptcy. That's because of a presumption of non-dischargeability if you do!

Putting it another way, don't use your credit card within 90 days of the filing of your bankruptcy! Not only does it look bad, but you'll probably get to pay the charges within the 90 days back!

The practice of running up credit card amounts has been referred to as "loading up" by experienced bankruptcy lawyers for many, many years. Try to avoid it!

Banks Want to Lend; Consumers Don't Want to Borrow!

2011-05-10T09:59:00.000-07:00

Why do banks want to lend money to consumers? Because banks make massive profits on those loans.

Right now, banks are interested in getting credit card money "on the street". In fact, their willingness to make credit card loans is at a 17-year high.

Consumers, God bless 'em, don't appear to want to play that game this week.

Because the unholy trinity of job losses, foreclosures, and inflation have done a pretty good job of educating consumers that credit card debt is an anvil around their neck, especially when they want to think about retirement.

Besides, consumers are aware that the friendly banker turns into an unfriendly collection company, or a vicious law firm, faster than a blond turns into a werewolf on "True Blood".

Fashion Tips for Bankrupts

2011-05-10T09:00:00.000-07:00

The First Meeting of Creditors, or 341 Meeting, is a source of ceaseless anxiety for debtors in Phoenix, or Scottsdale, or Mesa, or Chandler, or anyplace else in Arizona.

While I have produced a short video that discusses all of the questions that are usually asked in a 341 Meeting by the Trustee, there is a topic that I've never addressed previously.

It is, what should I wear to my first meeting of creditors?

Consumer Borrowing Increases; Is This a Good Thing?

2011-05-09T23:01:00.000-07:00

Some folks see an economic upturn when consumer borrowing increases during a depression.

My take is a little different than the analysis in this Bloomberg article: I believe that consumer borrowing is increasing because job creation is in the "would you like fries with that, sir?" category.

And after you've been making a hundred thousand a year as an engineer, and are now making minimum wage flipping burgers, you tend to borrow to cushion your lifestyle for a while before you realize that your unsecured debt is increasing, even though you're making minimum payments.

Forever.

Can Stay-at-Home Moms Become Millionaires?

2011-05-09T09:22:00.002-07:00

This article suggests that a stay-at-home mom can simply whip up an idea and become a millionaire.

Sadly, the smart money bets otherwise.

But I look forward to a better economic climate, when starting a business requires less of a leap of faith.

Because small businesses in the United States hire locally, and that's a good thing. Big businesses continue their programs of outsourcing, and while that may be good for some folks somewhere, it's downright awful for all the people who went to college, got student loans, and then had their jobs shipped offshore to India and China.

And those folks have the privilege of filing a bankruptcy, but it seems unfair to me, and that bankruptcy will probably not scrape off the student loans that got them the education that got them the job that was outsourced to someplace-or-another.

And remember this about small businesses: they tend to have a short life span, because running a small business is very hard work, and small business owners tend to burn out.

On the other hand, if you own a small business, you are highly unlikely to fire yourself!

Bankruptcy and Mother's Day

2011-05-08T14:28:00.000-07:00

Mother's should have their own bankruptcy Chapter, especially if they're raising a kid by themselves. It should be the loving, warm, supportive, easy and compassionate Bankruptcy Chapter. Which doesn't currently exist.

Some guys help with the fun part of having a baby, and then head for the tall timber, leaving the mom to take care of the resulting progeny. I get to file bankruptcy cases for those moms sometimes, and it often breaks my heart.

I try to avoid sobbing while they're actually in my office, because when the lawyer cries, the client tends to get anxious, you know?

Now, some folks say that it takes a village to raise a kid.

At a minimum, it takes a mother. A dad can sometimes fill in, but he has to work twice as hard, because guys can't multi-task (don't tell anybody; we're a little sensitive about it).

I hate it when a mother has to work, if she really wants to stay home with the bambino.

But a mother will do whatever it takes to take care of a kid, which is the only reason the human race survives.

And to all you mothers out there, God bless and keep you safe and happy, and may your burdens be light, and your rewards be great.

Long Haul Unemployment in Reno. And That Affects Arizona.

2011-05-08T07:28:00.000-07:00

When I read an article about a nice guy in Reno who moved to Texas to find work, I'm reminded that unemployment in one part of the United States affects unemployment all over the United States.

That is, an unemployed construction guy in Arizona is competing with everybody in construction in Az. AND in Reno. And in Arkansas.

So when I tell you I want to see small businesses opening, and job creation, I'm talking all over the U.S.

Otherwise, it doesn't help Arizona.

U.K. Consumer Confidence in the Economy Falls to New Lows: What Does It Mean?

2011-05-07T18:17:00.000-07:00

It just means that consumers in the U.K. are paying attention!

More Bailouts for Greece? Back to the Drachma? Or a Spanking for Greece?

2011-05-07T17:50:00.001-07:00

When you get third-hand reports of secret meetings about world leaders fumbling with the economy of Europe, you recall that politicians are actors too ugly for television and not smart enough for radio, and just barely able to understand the problems they are tasked with fixing, or real smart guys who get ignored because they lack charisma.

Either way, the economy in Europe is in trouble. And real people on the street knows for miles ahead when economic trouble is brewing. Politicians try to spray-paint over economic problems, because they know they're in the same boat as the CEOs of publicly traded companies; if the company shows lousy earnings, they get the boot, and somebody else gets to try to fix the problem.

So when I read an article saying that European leaders are fighting "to contain a mounting sense of crisis" about the single currency, all I can think is that everybody knows that the damage is done, and we're all just waiting for the announcement.

One thing politicians of all sorts are good at is pretending that it's business as usual, and a lot of them probably have such short time-horizons that they believe it.

One other thing: I wouldn't want to live in Greece today. Other countries are currently deciding the economic fate of the ordinary working man in Greece, not the Greeks themselves.

And as the South found out after the American Civil War, it's a bad and unpleasant thing when somebody else controls your economic fate, especially if they don't like you. The Germans discovered the same thing after World War I, and World War II.

And I'm currently hoping that we won't get to discover that firsthand, here in the United States, but I'm fairly worried about our biggest creditor, Communist China.

Because Communist China doesn't like the United States very much. Even after we gave 'em "most favored nation" status. The ingrates.

p.s. the hoo-rah about the Euro falling apart got a lot louder when an article in Spiegel Online addressed the possibility that Greece may pull out of the Eurozone and go back to good old-fashioned Drachmas. The secret meetings were in connection with figuring out a carrot of sorts to keep Greece in the Eurozone; and Germany owns the stick, which appears to be its role in all of human history.

p.p.s. what does this have to do with you? Well, if the Euro unwinds, and folks go back to Drachmas and Liras and God knows what else, that would be a little like U.S. States deciding that it's time to print their own money. At a minimum, figuring out the exchange rates would require supercomputers.

p.p.p.s. Now that I think about it, we may see something a little like the American Civil War in Europe, if countries try to escape the Euro, and are not permitted to escape. And that would be both bad, and very confusing. Who would I root for?

Are Gas Prices and Auto Expenses Really Higher than Groceries or Utilities? Well, Yeah!

2011-05-07T17:28:00.000-07:00

It's pretty surprising, but automobile expenses, including gasoline, were 14.5% of an average household's daily expenses (higher than groceries or utilities).

In 2010.

And Arizona residents are hardest-hit by increases in gasoline, except for folks who live in Connecticut. That's because we have a lotta trucks (we're a state of construction workers and cowboys, and we like pickups. That's just how it is.). And we own a lotta desert, which means a lot of driving to work; no way to get around it.

That's right; we're only number two. But with just a little more work, I know we can be number one!

And does anybody think that the percentage has gone up in 2011, with gas price increases?

Yeah, I see heads nodding in the audience.

Gas Prices Dropping? Maybe, Maybe Not.

2011-05-07T14:33:00.000-07:00

I always get a kick out of non-prediction predictions.

Here's a nice article that sort of predicts gas prices dropping in summer. Or maybe not.

I say maybe not because of the bet-hedging language in the article.

But be your own judge!

And note from the article the comment that some hotels are offering discounts to offset high gas prices.

Keep your eyes on the hotels: those, along with restaurants, are some of the canaries in the mine.

And why am I talking a lot about gas prices and bankruptcy in the same article? Well, Arizona residents (hereinafter "debtors in bankruptcy cases") may be spending 20% of their net incomes on gasoline. We actually have wide open spaces here in Arizona. No kidding.

Of course, with gasoline prices so high, it may be easier for a close case to pass the means test!

How About a 30% Interest Rate Forever, If You Miss One Credit Card Payment

2011-05-06T22:17:00.000-07:00

It never ceases to amaze me how much credit card companies are doing to send me business.

Let's think about this for a minute; I'm a bankruptcy attorney in Arizona, and people of all sorts come to me when they reach the conclusion that their debt is overwhelming.

And now major banks announce that if you miss a payment, they'll run interest at 30% on your account. Forever.

Now, with unemployment at record levels, and inflation at 10%, and gas prices through the roof and rising, I'm impressed by the "let's pile on" mentality of the banks.

And it used to be that if a lawyer sent another lawyer a client, a small gift might change hands; a box of candy, or a box of cigars, or a bottle of scotch.

I just can't think what I should send to the banks as a "thank you" gift for sending me so many clients.

I know!

I'll find some of those valentine-shaped boxes of candy, and send those to the banks.

Because, after all, the banks are clearly in need of...a heart.

A Landmark Chicago Hotel Files Bankruptcy

2011-05-06T15:06:00.000-07:00

My prior posts about hotel bankruptcy cases may have been prophetic.