An interesting article in American Banker just caught my eye. JP Morgan Chase, one of the bigggest of the big guys, has quietly shut down most of its consumer collection activities. As recently as mid-2011 this division was bringing in hundreds of millions of dollars a month in revenue for JPMC. Chase is mum about why it has stopped collection activities, but speculation is that it has something to do with similar problems faced by Chase, B of A and others in foreclosures: Lack of documentation for the debts.
It looks like the bank that was too big to fail is now too big to manage.
Friday, January 27, 2012
Thursday, January 12, 2012
Saving Your Business in Chapter 13
Most people think of Chapter 11 when they think of reorganizing a business. While it's true that you have to file Chapter 11 if you have a corporation or a limited liability company (LLC), if you're a sole proprietor you can reorganize through Chapter 13.
A sole proprietor simply means a person running a business without having incorporated or formed an LLC through which she conducts the business. If you're "doing business as" (d/b/a), you're probably a sole proprietor. There is no legal distinction between the business and the individual in a sole proprietorship. While this is often a disadvantage when it comes to protecting your personal assets (home, car, savings, etc.) from business debts, if it becomes necessary to reorganize the business being a sole proprietor lets you do so through Chapter 13.
Chapter 13 is only for individuals, which is why businesses generally don't file Chapter 13. But because there is no difference between the individual and the business in a sole proprietorship, solos can reorganize in Chapter 13. This means they can modify business leases, pay some debts, reject some contracts and often get all the advantages of Chapter 11 without the expense or hassle. So if your business is struggling Chapter 13 might be just what you need.
A sole proprietor simply means a person running a business without having incorporated or formed an LLC through which she conducts the business. If you're "doing business as" (d/b/a), you're probably a sole proprietor. There is no legal distinction between the business and the individual in a sole proprietorship. While this is often a disadvantage when it comes to protecting your personal assets (home, car, savings, etc.) from business debts, if it becomes necessary to reorganize the business being a sole proprietor lets you do so through Chapter 13.
Chapter 13 is only for individuals, which is why businesses generally don't file Chapter 13. But because there is no difference between the individual and the business in a sole proprietorship, solos can reorganize in Chapter 13. This means they can modify business leases, pay some debts, reject some contracts and often get all the advantages of Chapter 11 without the expense or hassle. So if your business is struggling Chapter 13 might be just what you need.
Tuesday, January 3, 2012
Bankruptcy Mills
There is an interesting article on MSN about cut-rate bankruptcy lawyers, also known as bankruptcy mills. You can read it here:
http://articles.moneycentral.msn.com/Banking/BankruptcyGuide/BewareCutRateBankruptcyAdvice.aspx
What constitutes a "bankruptcy mill" is in the eye of the beholder. Filing hundreds or even thousands of bankruptcies a year doesn't make a firm or an attorney a mill in my opinion. What does make a bankruptcy mill is when the attorney doesn't give the client the personal service the client deserves. If the attorney is up front and says, in effect, "we'll do a bankruptcy for you for $XX, but realize that for that price you won't get return phone calls, we won't answer your questions and we won't do much more than prepare the forms and attend the meeting of creditors," the client can hardly complain. But unless the attorney makes such a disclosure, most clients expect, and I would say, deserve personal attention. Questions arise. Clients expect those questions to be answered. They also expect a certain amount of "hand-holding" through what is usually a traumatic event in their lives. When an attorney ignores a client WITHOUT FIRST DISCLOSING that the bargain-basement fee the client paid doesn't entitle the client to personal attention, then that firm is a bankruptcy mill.
http://articles.moneycentral.msn.com/Banking/BankruptcyGuide/BewareCutRateBankruptcyAdvice.aspx
What constitutes a "bankruptcy mill" is in the eye of the beholder. Filing hundreds or even thousands of bankruptcies a year doesn't make a firm or an attorney a mill in my opinion. What does make a bankruptcy mill is when the attorney doesn't give the client the personal service the client deserves. If the attorney is up front and says, in effect, "we'll do a bankruptcy for you for $XX, but realize that for that price you won't get return phone calls, we won't answer your questions and we won't do much more than prepare the forms and attend the meeting of creditors," the client can hardly complain. But unless the attorney makes such a disclosure, most clients expect, and I would say, deserve personal attention. Questions arise. Clients expect those questions to be answered. They also expect a certain amount of "hand-holding" through what is usually a traumatic event in their lives. When an attorney ignores a client WITHOUT FIRST DISCLOSING that the bargain-basement fee the client paid doesn't entitle the client to personal attention, then that firm is a bankruptcy mill.
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