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Archive for the ‘General Bankruptcy’ Category

Celebrity Bankruptcies: How Fallen Stars Rise Again

Tuesday, March 29th, 2011

Celebrity Bankruptcies

It’s quite amazing to look back in history and see the wide variety of famous individuals that have declared bankruptcy. Although they may be rockstars, actors, or athletes, they have had financial hard times just like the rest of us. After a few too many nights of partying, overspending, bad investments, or one bad business decision, they were prompted to pull the BK card.

To start, MC Hammer’s famous song “You Can’t Touch This” was exactly what he was singing towards his creditors. In 1996 he filed for bankruptcy after reportedly spending $500,000 a month on his entourage and was in debt $13 million. One of his debts was to an interior decorator for $110,000! Along with the interior decorator, he owed an attorney over $500,000. It sounds like MC Hammer’s spending habits might have been even bigger than his hit songs.

While we’re talking about major music types, Cyndi Lauper has to be mentioned. Cyndi wasn’t always just having fun in the 80’s. “Time after time” in her early years she couldn’t pay her bills. Before her hit album she was in another band, Blue Angel, which broke up due to managerial issues. In 1980 Cyndi filed for bankruptcy and picked up a job in retail to just get by. Now you know Cyndi’s “true colors,” she may have landed at the top of the music charts, but not always the financial ones!

Along with the individuals who pushed us to blast our stereos, we have quite a few actors earning their stars in bankruptcy. While we were watching them for entertainment, creditors were watching them for their debts. Burt Reynolds had many “boogie nights” with his lavish lifestyle. He had a helicopter, two mansions, and a ranch. His life was extraordinary. Too bad he had to receive his “burn notice.” He received a pricey divorce settlement from his wife. This, along with a series of bad movie choices, led Burt to declare bankruptcy in 1996. He filed a Chapter 11, reorganizing his $10 million debt, and was allowed to keep his mansion in Florida. Hopefully Mr. Reynolds continues to make smart movie choices and stays away from those wild but beautiful women.

Speaking of beautiful women, Kim Basinger has always melted us with her dazzling beauty. Too bad her career choices aren’t as impressive as her looks. The blonde bombshell decided to back out of the movie “Boxing Helena,” leaving her with a law suit. Along with the poor movie decision, she decided to buy a small town in Georgia with the plans of turning it into a mini Hollywood. When the bills flooded in, Kim was drowning in money problems. The beauty didn’t plan for the financial difficulties that the town renovation brought.  She filed for bankruptcy in the early 1990’s. Kim may fail at entrepreneurial decisions, but she never fails at looking good!

We couldn’t mention the topic of entrepreneurial decisions and not mention Donald Trump. Trump, a man known universally for his business ventures, tv show, and interesting hair style, is one of the most successful entrepreneurs of all time. He has made some brilliant real estate moves, allowing him to build his empire. Unfortunately, not all of his moves are equally beneficial. In an attempt to expand, he entered into the area of casinos. This has not produced the outcome he was hoping for. Donald filed for bankruptcy in 1992, again in 2004, and then again in 2009. That’s three times in less than twenty years that he has declared bankruptcy, yet he is still an entrepreneur idol.  Trump has used this financial tool to help him maintain his empire and venture into new areas without great liability. Too bad filing bankruptcy couldn’t fix both his financial situation and his hair.

Well, we’ve discussed some singers, actors, and entrepreneurs, but what about athletes? Do those tough guys go through financial hard times too? Sure do! Those powerful muscles don’t protect them from hits of debt. Mike Tyson, to name one, had a lucrative career of $30 million. He reportedly made millions per fight. Sadly, his spending habits were as big as his ear biting incident. Tyson’s $400,000 in monthly expenses, including a pair of exotic tigers, earned him an outstanding $27 million in debt. Both he and his company, Mike Tyson Enterprises, filed for bankruptcy in 2003. Looks like Tyson’s bankruptcy helped him bite off a lot of debt.

As we hoped you have learned from this article, bankruptcy is shared by a wide variety of people. It is nothing to be ashamed or afraid of. In fact, as you can see, it is even a beneficial tool for those who want a fresh start. The figures we named above were confronted with the same challenge that we are all faced with, finances. Luckily, they chose the right path and solved their problems. This brilliant choice to get a fresh start is why they can remain stars in our eyes.

The best form of Loan Modification may not be a Loan Modification at all!

Friday, March 18th, 2011

In California, consumer bankruptcies rose 25% in 2010 and were up 9% nationwide. There were 24,117 consumer bankruptcy filings here in the Santa Ana division of the Central District of California…and that was just in the first quarter of 2010! The majority of those were Chapter 7 filings to liquidate assets and eliminate unsecured debts.

What should be of great interest, especially here in South Orange County is the growth seen in Chapter 13 and consumer Chapter 11 bankruptcy filings. In both of these, the consumers typically are able to keep their homes, eliminate their junior mortgages (i.e. 2nd, 3rd, and 4th mortgages) entirely, and even reduce the amount owed on other secured debts. When an individual does not qualify for Chapter 13, they often consider a Chapter 11 bankruptcy.  For example, if a debtor’s secured debt exceeds $1,081,000 and/or combined unsecured debt exceeds $360,475, and the debtor wishes to keep delinquent assets, the only viable bankruptcy recourse would be to file for Chapter 11 bankruptcy protection.

Here is how it works: years ago, when home values were at their height, home owners used the equity in their home(s) to borrow against. They took out second mortgages, third mortgages, and even fourth mortgages. Those mortgages were secured by the equity in the home. But today, one in four California homeowners is upside down (where the liens against a property exceed the value of the property).  In many cases, debtors can completely eliminate junior liens either in a Chapter 13 or Chapter 11 Bankruptcy!

For most individuals and families, eliminating their junior mortgages and creating an affordable three to five year repayment plan on their debt is better than anything possibly achieved through a loan modification. Consumers are able to get caught up on delinquent mortgage payments and eliminate their junior mortgages upon the completion of their Chapter 11 or 13 plan. Consumers then walk away from their plan, free of all unsecured debts and their second mortgages in some cases. It truly represents a fresh start.

The great news is that by using this plan, it is possible to stay in your home while paying only a percentage of your unsecured debt even though you may be making less than you did several years ago.

The only shame is that most people who qualify for this type of bankruptcy don’t even know it exists!

Stephen Doan is a partner in the San Clemente based Doan Law Firm, a father-and-five-son law practice founded on Judeo-Christian principles that strives to treat every client with unfailing honesty and compassion. Considered among the best in the nation, Doan Law Firm is California’s Largest Family of Attorneys and helps families every day improve their financial health. For more information, call 888-DOAN-LAW (888-362-6529) or visit www.DoanLawFirm.com

Is There Credit After Bankruptcy?

Saturday, February 19th, 2011

The simple answer is yes. More importantly, your financial health after bankruptcy can be better than ever! If you have been shying away from bankruptcy, thinking that it would permanently destroy your credit, think again. Making late payments and missing payments will adversely affect your credit rating, pulling you into a downward spiral. All that does is extend the pain and suffering. By eliminating your toxic debt through bankruptcy, you are able to immediately begin a process of reestablishing and improving your credit. Some of our clients have seen their FICO score rise well above 700 in only two years. Since you won’t be able to have your debt discharged again for at least 8 years, you become a very good credit risk and will begin receiving credit card offers only days after your discharge.

Doan Law Firm understands your concerns and your need to get back on track rebuilding your financial health.  Our team can help you get there.

Declaring bankruptcy is often the first step and best way to begin rebuilding your credit score and improving your financial health. Your lowest score will be the day you decide to file. Your financial rehabilitation program begins the moment you file with the U.S. Bankruptcy Court.

The False Panacea of Loan Modification

Monday, January 3rd, 2011

All of my homeowner clients are at some point in the process of home loan mortgage modification when we initially meet.  The most common story is that between phone calls, paperwork and run-around, the modification has been like a part-time job.  The real tragedy is that while my clients were chasing a modification, the state of their finances has fallen dramatically.

ScrippsNews recent article entitled Flawed Mortgage Modifications Lead to Bankruptcies shed light on the reality of loan modifications.  ScrippsNews says, “Federal mortgage modification programs aimed at keeping financially at-risk homeowners from being foreclosed on are instead fueling consumer bankruptcies in Florida, according to several housing experts…”

Homeowners on the state’s Treasure Coast who were denied mortgage modifications through the federal Home Affordable Modification Program say bankruptcy was the only way they legally could get out of their homes and protect future assets from mortgage servicing companies and lenders.

After nightmare experiences and enormous frustration with the modification program, they feared lenders might go after their assets to recoup losses years after a foreclosure or short sale, which is selling a home for less than the remaining balance on the loan.

Michael Larson, a real estate analyst with Jupiter-based Weiss Research, described Lehmann’s experiences as an unforeseen consequence of the Treasury’s failed modification program.  ‘The government was overselling this program, over-promising and under-delivering. It was not designed to take care of the key problem and fix the problem of upside-down homes and the structure of those loans,’ Larson said. ‘There’s a fundamental problem with these modification programs and many more people will foreclose, go bankrupt or both as long as there is no long-term change to its design.’”

Treasury spokesman Mark Paustenbach said “We have worked tirelessly for 18 months to stand up a ground-breaking program that has given half a million of these folks permanent mortgage relief. But we know that we have only begun to address the problem. We will not stop until we make mortgage modifications easier, shorten decision time, reduce paperwork and give homeowners greater peace of mind.”

I always tell my clients not to make their financial decisions based on a the hope of a loan modification that will likely not happen, not be permanent or can be revoked.

Ask Doan Law Firm: How Will Bankruptcy Affect My Credit?

Wednesday, December 15th, 2010

For the bulk of people contemplating bankruptcy, their credit has already been severely damaged.  Each creditor reporting negatively every month takes a heavy toll on a credit score.  For clients whose credit score is still standing, they’ve been engaging in expensive juggling that takes a personal toll.

Bankruptcy stops the constant negative reporting so the positive ones can take an effect.  So while it has a dramatic effect, it allows credit to recover.

Once your bankruptcy is discharged, you will immediately be offered low balance secured credit cards.  Using those cards will begin to rack up positive points on your credit.  Also helpful are payments on any house or car you keep through bankruptcy.

After bankruptcy your credit will recover and build much more quickly than when you were just starting out.  FHA regulations permit lending two years after a bankruptcy.  With very little effort, your credit will recover quickly.

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