Archives for April 2013

Revel CEO resigns weeks before expected bankruptcy filing

Recent news of Revel Atlantic City CEO Kevin DeSanctis’s resignation has brought even more attention to the failing company and its imminent bankruptcy. The $2.4 billion resort is filing for Chapter 11 bankruptcy in order to save the company and wipe clean some of the debt that has been piling on. Unfortunately, the young casino has had difficulty bringing in gambling revenue in Atlantic City and has been unable to fulfill the high expectations of the casino market. Full article.

This bankruptcy filing shows that businesses large and small can run into trouble from bad luck, poor planning, or market conditions. See my article on ways businesses can avoid bankruptcy. However, when a business is in trouble, the biggest mistake owners make is not forming a workout or exit strategy early enough. As with so much else in life, timing is everything. So often, I see businesses that could have been saved had someone sat down to do some serious planning, including consideration of a bankruptcy, orderly liquidation or workout, much sooner.

For businesses, the options include an orderly liquidation, secured creditor workout, chapter 7 bankruptcy, or a chapter 11 reorganization. Each of these have risks and costs, as well as benefits. Careful planning including a detailed look at cashflow and opportunities to reduce expenses or strategically increase revenue is critical. Just as importantly, businesses need to have a multi-prong series of exit strategies. Not planning is a recipe for disaster. All this needs the advice of an experienced business bankruptcy specialist.

We have seen that many business owners delay considering these matters because they fear the personal consequences of a business bankruptcy or shut down. These can include loss of income from the business, loss of an enterprise they have put their heart and soul into, or personal liability. Many have given mortgages on their homes or have personal liability for bank debt and possibly payroll or sales taxes. But ignorance is not bliss. Things do not get better by ignoring them.

Careful planning requires that the individual owners know the options they face personally. At some point, in order to preserve the confidentiality of their discussions, it may be advisable that the individual owners have their own attorney separate from the corporate or business attorney. Options to be explored are workout strategies as well as bankruptcy. Here, the right advice is essential so that the owners can minimize or avoid future problems. The traps are many and easy to fall into.

For both businesses and their owners, being in financial trouble is scary and overwhelming. Hiring the right attorney to help you to plan and guide you through the options and choices is essential. The right attorney can help business owners take back control. There is no substitute for experience. Advice and representation from qualified legal counsel is the best money that can be spent.

Neuner & Ventura are experienced attorneys federally recognized as a debt relief agency helping people obtain debt relief using bankruptcy and other means. As a long-time business bankruptcy specialist, Steven R. Neuner has the background needed. Please contact Neuner & Ventura at (856) 596-2828 for a consultation.

Rebuilding Credit after Filing for Bankruptcy

Fox Business highlighted the important steps that one must take to restore a credit rating after filing for bankruptcy. There are limited ways to get out of the financial hole that many Americans are being trapped in. The most important first step is the one most people find hardest. Develop a household budget and stick to it. Know how much money is coming in and where it has to be spent. Identify and close off the “money leaks”, those little expenses that add up (e.g Buying lunch at $5/day equals $100 a month; buying coffee out at $3 a pop; cigarettes, liquor).

A credit score is compiled from several factors, including payment history, length of credit history, and amount of debt relative to income. Whatever debt you still have (eg car loans or leases, or mortgage payments if current) needs to be paid on time without fail. Many of our clients will eventually get a new credit card. One early option here is to apply for a secured credit card. By having a secured credit card, you are only able to charge items on your card as you put money on the card account. Most secured credit card companies will report the activity of your card to the credit bureaus, which increases your credit score with time. There are a number of other ways to start to buy and pay off items in order to keep raising your score.

But having credit is not nearly as important as how you use it. We recommend that clients have a credit card, and use it only for limited purposes, such as buying gas, then pay it off in full each month.

For those who have not already done so, filing for bankruptcy may be a positive step in tightening your financial belt, and taking back control of your life. We insist that our clients put together a personal budget and make getting back to financial stability as their all-important long term goal. In this regard, one bankruptcy requirement (we call it the “ticket out”) can be quite helpful if taken seriously. I refer to the “debtor education” financial management course that is required to receive a bankruptcy discharge. This course, from a credit counseling agency approved by the United States Trustee, can be done on-line, usually in about an hour. It typically covers the basics of budgeting and avoiding the traps that put debtors back in trouble.

Completing the financial management course after filing bankruptcy, and filing of the certificate form is essential. If not done, the case will be closed without a discharge of debts. Since the discharge is the whole point of a banrkuptcy filing, all the benefit can be lost unless the case is reopened. This will require a new filing fee and additional work by a usually taken during bankruptcy, although it can be completed before filing.

The point is that the damage to ones credit from a bankruptcy is not permanent. Indeed, we believe that for those who are drowning in debt, a bankruptcy is the best step back onto the road to financial stability, and an ability to pay debt that in turn will result in a return to a better credit rating.

Nuener & Ventura are experienced attorneys who are federally recognized as a debt relief agency. Our attorneys can help you take back control of your lives. We know how to point you in the financially responsible direction that you need to head after filing for bankruptcy. Please contact Nuener & Ventura at (856) 596-2828 for a consultation to start a new financially responsible life.

Debt Collectors Prone to Violation of Bankruptcy Discharge

A bankruptcy discharge releases the debtor from personal liability for most but not all debts. In essence, the debtor is no longer legally required to pay any debts that are discharged. This discharge is permanent. The bankruptcy discharge is a court order that prohibits the creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters and personal contacts.

Upon execution of the discharge order, creditors receive a copy of the order of discharge, and are put on notice that they violate the injunction provisions at their own risk. Such violations of the order of discharge are considered contempt of court. The bankruptcy court has the inherent power to punish for such contemptuous conduct [Code sec. 105 (a) and Rule 9020 (b)]. There are many cases that are used as examples that such violations are not to be taken lightly and will not be tolerated

The discharge is the most important right that bankruptcy affords. It has its limitations, as we have discussed in recent blog articles and discuss below. However, we see with some regularity that some creditors whose debts have been discharged still try to collect anyway. One way they do this is to include fine print stipulations written on the backsides of the notices that are sent, or outright collection efforts.

Some debts are “automatically ” exempt from discharge. These debts include most income taxes, all payroll and sales taxes, alimony, child support and other “domestic support obligations”, and most student loans. If you sign an agreement to reaffirm a car loan or other debt during the bankruptcy and the agreement is approved by the court before your discharge, you have given up the protection of a discharge in the only way allowed for such debts. A discharge also does not protect you from most debts that arise after a bankruptcy filing, including condominium, co-op or association fees. Creditors with collateral, such as mortgage holders have the right to pursue foreclosure, repossession or sale of their collateral if the loan is not current. This right does not extend to trying to collect on the personal obligation. See our recent blog articles on this topic.

If you are facing this type of activity, we recommend you document all the contacts and keep all the notices. Recording telephone calls is a good idea, but only if you advise the caller during the recording that you are recording the call. If you think your rights are being violated, the first step is to send a clear notice in writing to stop, and keep a copy. If the collection efforts persist, it is time to call in experienced legal help.

Neuner & Ventura are experienced attorneys who are federally recognized as a debt relief agency. Our attorneys can help protect you against creditor abuse both before and after a bankruptcy. Please contact Nuener & Ventura at (856) 596-2828 for a consultation.

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