Total Bankruptcy

More people in South Carolina may begin filing bankruptcy because of a new state bankruptcy law.  Some consumers who owe a large amount of credit card debt may have previously avoided filing bankruptcy due to income restrictions or for fear of losing their vehicles.

Under the revamped bankruptcy law in South Carolina, more people will be eligible to file bankruptcy while keeping their cars and other property out of the reach of bankruptcy trustees.

To read more about the changes in the bankruptcy law in South Carolina see:

Bankruptcy Now Easier in South Carolina

The U.S. Supreme Court approved amendments to the Federal Rules of Bankruptcy Procedure on April 23, which are generally speaking a rubber stamp on rules implemented by bankruptcy courts across the nation in August 2005 as a result of BAPCPA.

Congress must vote on approval of these measures in order to enact them as laws, and doing so would finalize the rules from their current provisional state.

You can read the Supreme Court decision here.

For more on the bankruptcy rules set in place by the BAPCPA, visit Total Bankruptcy's FAQ section.

In the last week or so, we've been talking a lot about how the U.S. credit crunch has sparked fears about student loan availability. With this in mind, the country's largest student loan lender -- Sallie Mae -- announced late last week that it will be cutting certain types of student loans and charging loan application fees ranging from $35 for freshman students to a couple hundred dollars for graduate students.

Noting that one-third of the top 100 student loan lenders have left the business as a result of current credit difficulties, a high-ranking Sallie Mae official provided some more reasoning behind this decision:

• Sallie Mae to Charge for Loans to Students.

After months of debate on the best way to address the current housing and foreclosure crisis in the United States, the Senate passed a housing stimulus package by a 84-12 vote earlier today.

Representing a compromise between the call for more government action from Democrats and the fear of a government bailout from Republicans, the housing stimulus package includes these notables:

• providing $4 billion for cities to purchase and rehab foreclosed properties and an additional $13 billion in tax breaks to spur on home sales and home builders;

• changing  language in the FHA's mortgage insurance program to permanently increase its loan limit to $550,000 and slightly increase its down-payment requirement to 3.5 percent;

• providing an additional $50 million for housing couseling, thus bringing the grand total for such  efforts to $150 million;

• giving the Neighborhood Reinvestment Corp. $30 million to provide legal aid for at-risk homeowners; and

• including more safeguards for seniors using FHA reverse mortgages.

In the midst of concerns about student loan availability during the credit crunch, the House Education and Labor Committee approved a bill yesterday that would aim to prevent current market problems in the United States from curtailing the abilities of aspiring college students to obtain student loans.

There has recently been a lot of concern about student loan availability as the current economic climate has prompted investors to stay away from asset-based securities that often provide the backing for student loans.

Just this week, the Education Resources Institute (“TERI”) -- the oldest and largest non-profit guarantor of private education loans in the country -- announced that it was filing bankruptcy. Other recent developments in the student lending industry had prompted many to call out the Department of Education to take some action and ensure student loan availability for aspiring high schoolers and their parents.

With this issue in mind,  the House Education and Labor Committee's bill (H.R. 5715) aims to prevent students from experiencing any future problems in obtaining student loans as a result of financial market shocks, according to Committee Chairman George Miller as reported in a CongressDaily.com story.

So what will the bill do? H.R. 5715 will strive to get aspiring college students away from relying so heavily on private loans by increasing:

• annual loan limits on federal student loans by $2000 for all students and
• total amounts that students can borrow for their college education.

The bill would also provide parents with six additional months to defer payments on their children's loans.

While this bill may not address every potential issue that could arise with market troubles affecting student loan availability, at least it's a start. Because when it comes to something as critical as higher education, there needs to be more urgency when addressing such issues.

In early April, the American Bankruptcy Institute detailed data from the National Bankruptcy Research Center (NBKRC) revealing that consumer bankruptcy filings were up 15.2 percent nationwide this past February as compared to January 2008 and up 37.3 percent from February 2007.

With that in mind, an interesting editorial in today’s Minneapolis Star-Tribune pits the blame for this increase in consumer bankruptcy filings on the credit industry. Give the editorial a read as it offers a a bankruptcy attorney's poignant perspective on the issue.

We all know every time the government makes a concerted effort to do anything, there's more red tape than at a marathon supply dealer trade show.  The latest evidence?

Rebate letters to cost $42 million

And, "It doesn't include the tab for another round of mailings planned for those who didn't file tax returns last year but may still qualify for a rebate."

As a future recipient of one such rebate (and requisite notice letter), I think I speak for recipients everywhere when I say: just add the price for the stamp for this one to my rebate check. 

I think this more than offsets the "energy-saving" "innovative" approach to publishing the budget, when Bush and folk patted themselves on the back for distributing it digitally.

Some good news for those bankruptcy filers who have fallen prey to the credit card companies targeting debtors mentioned on this blog.

As the North Country Gazette reports, First Premier Bank, who offers one of the worst subprime credit cards on the market, has come to terms with the New York State Attorney's office on a settlement of $4.6 million to be refunded to consumers who were deceived by its marketing and lending practices. The settlement amount includes $4.5 million in refunds and $105,000 in penalties and costs.

First Premier was cited as falsely promising customers that they were pre-approved for a credit card with a $2000 limit, 9.9% fixed APR and no processing fees for opening the account.  However, consumers who signed up for their cards found themselves hit with all kinds of fees, in addition to credit limits much lower than and interest rates much higher than those promised.

One consumer who filed a complaint to the Attorney General's Office experienced what is considered typical for First Premier and similar lending companies: he received a credit line of only $250, and before he could even use the cards, he was billed for fees that left him with less than $70 in credit on the card.

Many consumers who keep the cards complained that their balances rose astronomically due to hidden fees that appeared without warning on monthly bills.  Some of the fees that the Attorney General's Office found excessive: "account set-up and participation fees, annual fees, late fees, overlimit fees, credit limit increase fees as well as fees for paying online, accessing an account or additional card fees."

In the case of the "credit limit increase fees," for example, many such cards automatically increase the credit limit by $100 monthly, and charge $25 for this "convenience."

Under the settlement, First Premier is required to reform its billing practices and marketing of its credit cards.  For instance, they can no longer charge customers processing fees or other fees until they use their cards for a purchase or cash advance.  Also, they are no longer able to market their subprime cards as "Gold" or "Platinum" cards unless they also clearly specify the risks involved, and cannot promise "no processing fees" unless they remove the processing fees.

For all of us waiting anxiously to read O.J. Simpson’s cancelled book, “If I Did It,” we may yet get the chance. A Florida bankruptcy court awarded 90 percent of the proceeds from the book and Simpson’s name and likeness in connection with it, to relatives of murder victim Ron Goldman.

The Goldmans were awarded $33.5 million in a wrongful death action in 1997. According to the Washington Post, the bankruptcy court recently ruled that Lorriane Brooke Associates was formed as a shell company to conceal Simpson’s book earnings from the Goldmans.   The Goldmans agreed to give the first ten percent of the first $4 million in gross profits, and a percentage of all proceeds thereafter, to Lorraine Brooks Associates.

A lawyer for the Goldmans said they’re considering changing the name of the book to “Confessions of a Double Murderer.”

Olympic Track and Field Star Is Nearly Broke

The Los Angeles Times recently reviewed court records for Marion Jones and found that the Olympic star who won five medals seven years ago in Sydney and was once paid millions in endorsement money and as much as $80,000 per race is facing bankruptcy. Jones is apparently in heavy debt and fighting off court judgments. Jones' financial problems first became apparent in a deposition in a breach-of-contract lawsuit she filed against former track coach Dan Pfaff, who countersued and won nearly $240,000 from Jones for unpaid training expenses and legal fees. In order to raise money last year, Jones had to sell two properties, including her mother's house. Her $2.5 million mansion in Chapel Hill, North Carolina was also foreclosed on.

An Associated Press story detailed how Jones has been swamped by legal fees since 2003, when she was linked to the BALCO controversy.  Jones tested positive for a performance-enhancing drug EPO last year and had to miss several races while clearing her negative urine sample with a positive one. Missing those races allegedly cost Jones an estimated $300,000. Last July, Jones was linked to an alleged check-counterfeiting scheme that resulted in her ex boyfriend and coach Tim Montgomery being criminally charged.

Prior to her legal difficulties, Jones was one of the first female track stars to become a millionaire from the sport. She won three gold medals in the 2000 Summer Olympics and once earned more than $1 million annually from race bonuses and her endorsements

For most people nowadays, it is quite common to maintain a couple of email accounts. With the requirements that come with work and everyday life, it is even more common for people to fall behind on their email (you can count me in that overcrowded boat). With that said, more and more people are declaring email bankruptcy as a means to solve this problem. Basically, a person wipes his or her swamped inbox clean and starts anew during an e-mail bankruptcy, a term which has even found its way into the lexicon of the Urban Dictionary.

So should you file for email bankruptcy? For some people, email bankruptcy offers false hope, is bad business practice and can be prevented by simply refusing to be overloaded by email overload. For others like the recording artist Moby, email bankruptcy has offered the fresh start that they so needed. Regardless of where you stand on email bankruptcy, there are some compelling arguments on both sides, and here are just a few.

•  Declaring Email Bankruptcy
•  E-Mail Reply to All: 'Leave Me Alone'
•  Why You Shouldn’t Declare Email Bankruptcy?
•  Alternatives to Email Bankruptcy
•  Death by Email

Music Producer Lou Pearlman, who created the Backstreet Boys and ‘N Sync is being transferred from Guam to the continental United States to face federal bankruptcy charges. According to bankruptcy court documents, Florida investigators allege that Pearlman defrauded more than 1,000 investors out of more than $315 million in a Ponzi scheme.  Several banks say he owes them more than $120 million.

Assets have been liquidated in two bankruptcy cases against Pearlman and his companies. The producer has ignored bankruptcy court actions against for many months.

Pearlman was arrested in Indonesia on a count of bank fraud. He had been expelled from the resort island of Bali after the FBI contacted authorities on the island.

Affectionately nicknamed “Spiderman” for his end-zone celebrations in which he pretended to shoot spider webs out of his wrists after scoring a touchdown, former NFL All-Pro receiver Andre Rison has gotten himself tangled into a serious web of trouble for failing to pay child support. Rison is facing  a court-ordered bankruptcy to pay back more than $105,000 in child support, attorney fees and court administrative costs. Rison has until June 25^th to respond to the order before the court will begin to go after his assets. An Associated Press story detailed that Rison’s creditors include his ex-wife Tonja, who is seeking more than $58,000 in child support, and a law office seeking $46,000 in unpaid legal fees for a child support case involving two children that the receiver fathered with a girlfriend.

A former star at Michigan State, Rison is known for his playing time with the Atlanta Falcons, where he teamed up with another king of flash, cornerback “Neon” Deion Sanders. Rison won a Super Bowl with the Green Bay Packers in 1997 and also played for the Indianapolis Colts, Cleveland Browns, Jacksonville Jaguars, Kansas City Chiefs, Oakland Raiders and Toronto Argonauts of the Canadian Football League.

While certainly having a respectable pro career, Rison was also known for his controversy off the field. His mansion was burned down by then girlfriend and the late Lisa “Left Eye” Lopes of the R&B group TLC in 1994. He was also dubbed “Bad Moon Rison” by obnoxious ESPN commentator Chris Berman after a Creedence Clearwater Revival song, and the nickname seems appropriate now more than ever considering the current sticky situation that the sure-handed receiver is in. 

You may have heard how some people have found that filing for bankruptcy has allowed them to get the fresh financial start they needed and stop living in fear of harassment from angry creditors, but did you know that filing for bankruptcy may help stop pornography. Say what? That's right. A story in The New York Times detailed how Amp'd Mobile's decision to recently file for bankruptcy would likely halt the introduction of sex-oriented programming on cellphones.

The story detailed how Amp'd Mobile had been considering offering such imagery on its cellphones for adults, of course. Marketing itself as a mobile carrier for the young and tech-savvy, the company allegedly considered this "risky proposition" during a meeting with industry analysts in March (but what else should we expect in an age where sex sells)! The story added how no mobile carrier currently offers still nude images or sexual videos on its phones (even though these materials may still be downloaded to cellphones via third-party websites). However, after filing for bankruptcy on June 1^st, Amp'd Mobile is apparently going to take the conservative approach, at least for now. Thank goodness for that.

Oh, how we should long for the good ole days when phones were meant for, I don't know, getting in contact and talking with people.

Former Green Bay Packer player Bob Long won a victory in bankruptcy court. The court ruled he isn’t liable for $1.7 million in debt. The debt involves a failed motel venture in Antigo, Wisconsin. The company that held the mortgage on the motel claimed Long had filed a false financial statement and the debt should not be discharged.

Long was a wide receiver for the Packer championship teams in the first two Superbowls.

Richmond, Virginia based, technology retailer Circuit City has announced a second round of job cuts. In March, Circuit City laid off 3,400 retail workers nationwide. Layoffs account for a large number of bankruptcies each year.

Circuit City claims that by the end of the year, it will have added more jobs than it has eliminated.

Idaho fell from 14th to 17th place among states with the highest rate of bankruptcy filings in 2006, according to industry data. The American Bankruptcy Institute tracks bankruptcy filings per household in each state.  In 2006, Tennessee had the highest bankruptcy rate, with one filing per 84 households.

States in the Intermountain region saw their bankruptcy rankings improve, primarily because the mountain states are outperforming the national economy. Nevada, ranked 7th in 2005, rose to 14th in 2006. Utah rose from 3rd to 10th. Wyoming rose from 32nd to 44th place, and Colorado from 11th to the 19th spot.

One of the nation’s largest student loan guarantors, the Illinois Student Assistance Commission, is considering granting a break to former students mired in debt. Executive Director Andrew Davis has asked his staff to look into whether the agency can forgive interest and fees on student loan balances when a borrower files for bankruptcy. 

Alan Collinge, founder of Student Loan Justice, said such a move would be “groundbreaking.” 

Currently, borrowers who run into trouble paying back loans can see their balances double or triple with compound interest, late fees, and collection costs. Under federal bankruptcy law, it is nearly impossible to discharge student loan debt.

A federal judge ordered a bankrupt company to turn over any copies of O.J. Simpon’s unreleased book, “If I Did It,” to his children. Last week, a bankruptcy judge ruled that Lorraine Brook Associates should be liquidated. The company, which names Simpson’s oldest daughter, Arnelle, as its head, still retains the rights to the book.

Lorraine Brooks had struck a deal with HarperCollins to be included in an auction for the book’s rights, but then filed for bankruptcy, putting the sale on hold. The judge ordered that all copies of the book, including excerpts, summaries, and manuscripts, be turned over to prevent any unauthorized distribution or dissemination.

Simpson was acquitted of killing his ex-wife and her friend in 1995, but he was found liable for the murders and ordered to pay $33.5 million in a civil judgment. Following public outrage over the book, HarperCollins cancelled its release.

Roger Waldner, former owner and CEO of H&W Motor Express, headquartered in Iowa, pled guilty to two counts of bankruptcy fraud. He now faces up to 10 years in prison and $500,000 in fines. He was indicted on 12 counts of fraud for driving his company into bankruptcy, including lying to creditors and on his bankruptcy petition. He reached a plea bargain just before his trial was to begin.

According to court documents, almost $2 million were transferred to other companies either owned or associated with Waldner and other H&W officers. In 2002, the trucking company filed for bankruptcy protection. Numerous employees lost their jobs and pensions.

A patient in Cornwall, England was told he had less than a year to live. In a strange case of illness induced bankruptcy, John Brandrick faces bankruptcy.   After Brandrick used all his money and even sold his clothes so he could enjoy his last moments of earthly existence, his doctors now tell him they were wrong. Doctors have told Brandrick their diagnosis of terminal cancer was wrong and he has fully recovered from a different, non life-threatening condition.

Brandrick decided, upon learning of his death sentence, that his priority was to live every minute of his remaining life to its fullest. He quit his job, sold his car, stopped paying his mortgage, and dug into his life savings to free up time and money. He and his life-partner spent thousands of pounds on themselves and friends and family.

When he was still living after a year had gone by, Brandrick began to have doubts about his diagnosis. Now, he has to start over. I hope he remembers his Favorite Year fondly.

A Florida small business owner has been arrested on 17 counts of grand theft. A police detective had been examining Paul Guillette’s books in connection with his company, Pro-Tec Shutters. Seventeen of his customers had complained he had taken their money, but hadn’t installed the shutters they had purchased. After the detective found a $49,000 company check to Guillette’s wife for “dividends,” he was arrested.

Guillette and his wife had filed for Chapter 7 bankruptcy after being sued by several of Pro-Tec’s customers. Guillette’s attorney said Pro-Tec had been trying to pay back its customers after an increase in aluminum prices of 20 to 40 percent made it impossible for Pro-Tec to install the shutters his customers had paid him for.

What is being called a “perfect storm” of financial troubles and higher prices have led to a spike personal-bankruptcy filings in Central Florida this year. Nearly 1,300 personal-bankruptcy cases were filed in the first three months of 2007, nearly twice as many as in the same quarter of last year.

A credit counselor said people are drowning in everything: debt, divorce, health issues. What’s really new this year are mortgage problems due to sub-prime lending and gas prices that are already over three dollars per gallon.

Elizabeth Warren reports in her Talking Points Memo blog that corporate America equates bankruptcy with moral failings such as domestic violence.

Intelius, a company providing background checks, recently ran an advertisement in the New York Times suggesting that women should “get the whole story on him, before it’s too late.” Warren says Intelius will check, along with other things, whether your man has filed for bankruptcy and whether he has been charged with domestic violence.

According to Warren, corporate America sees bankruptcy as moral depravity. They ignore why you declared bankruptcy; medical debt, job loss, spousal abandonment, etc. Capital One says someone who declares bankruptcy is immoral. Intelius warns you should watch out for anyone who’s declared bankruptcy.

Floyd Landis, with his Tour de France championship in question, says he may soon have to declare bankruptcy. Landis, who made an incredible comeback during last year’s Tour, has been accused of doping. He said his legal bills already amount to more than $1 million, half of which have been paid by donations. 

Landis has a hearing next month before the United States Anti-Doping Agency. A second blood test is currently being conducted in France.

The number of Americans filing for bankruptcy hit an 18-year low last year, in part, because filings had surged in late 2005 before the new bankruptcy laws took effect. Last year, 600,000 individuals filed for bankruptcy; the smallest number of filings since 1988. Filings in 2006 were down a whopping 71 percent from 2005.

Samuel Gerdano, executive director of the American Bankruptcy Institute, a non-partisan research group, attributed the drop in filings to the huge surge in filings in 2005. Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005 in an effort to protect creditors. After the law was passed, consumers flocked to file before the law took effect.

Many experts expect bankruptcies will be back to normal in 2007, partly due to the recent fallout in the mortgage industry and related foreclosures. Gerdano said the “underlying economic condition are ripe for consumer bankruptcies to go back up.”

A court-ordered auction of the rights to O.J. Simpson’s book “If I Did It” was cancelled because Simpson’s company has declared bankruptcy. Fred Goldman, the father of murder victim Ron Goldman said he would ask the bankruptcy court to sell him the book rights as part of his campaign to collect $33.5 million in damages Simpson was order to pay in 1997.

Simpson’s book was scrapped after a nationwide outcry over his making a windfall from his, allegedly, murdering Goldman and Nicole Simpson. His book reportedly would have described a fictional tale of how Simpson had committed the murders, if he indeed had. Simpson was found not guilty in criminal court of murdering the pair, in a sensational trial. He was later found responsible for the murders in civil court and ordered to pay Goldman for the death of his son.

Since the 1997 civil verdict, Simpson has found ways to pay Goldman little of the $33.5 million the court ordered him to pay.

Few businesses come back to life after filing Chapter 7 bankruptcy, but CPM Wolverine Proctor LLC has done it. Wolverine Proctor & Schwartz LLC filed for bankruptcy almost a year ago. Today, eight months after being acquired by Waterloo Iowa’s CPM, it reopened its Lexington Kentucky plant.

Last week, the newly reopened plant shipped a huge industrial oven for preparing frozen pizzas and a nearly as large multiple conveyor/dryer system for the cereal industry - the first two pieces of new capital equipment it has produced since the bankruptcy. The projects sold for about $1 million dollars each.

The company restored 45 of the 50 jobs at the plant. Chuck Crouch, a former and restored employee, said “I’m glad to be back.” Peewee Purdue said of the plant: “This place has always had work. I never have understood why it closed down.”

A Hancock Fabrics store in Fort Collins, Colorado will close as part of the corporation’s March bankruptcy filing and reorganization. The Mississippi-based company had over 400 stores prior to its Chapter 11 bankruptcy filing. The company will close 104 stores, on top of the 30 stores it closed in February.

Hancock’s regional manager doesn’t even know how many employees work at the store. The company’s CEO said the closings were “a necessary step to reposition the company for the future.” Tell that to the employees losing their jobs; in person if you dare.

Texas legislators have proposed a bill to protect borrowers from predatory mortgage lenders. The bill, proposed by Representative Norma Chavez, would allow the Texas state agency regulating mortgage brokers to hire additional staff. The proposed law would increase disclosure requirements for lenders, provide regulators with tougher enforcement options, and educate consumers.

A recent State Auditor’s report found that staffing levels at the Texas Department of Savings and Mortgage Lending “are not adequate to protect consumers from predatory mortgage lending practices.” The agency receives all its funding from license and registration fees, but instead of being allowed to use the money to hire new staff, a spending cap requires that part of the money is sent back to the state's general revenue fund.

Not only can filing your taxes online be easier and quicker, it can help protect you from identity theft. The IRS is using a technology that lets you know, instantly, if your social security number is being used on someone else’s tax return.

Imagine applying for social security and being told you’ve never worked.  It your social security number is crossed up with someone else, your social security account could be empty. The sooner you find out that someone else, whether accidentally or criminally, is using your social security number, the better.

Yes, almost 50 million credits were stolen. This is one of the largest identity thefts on record.  The parent company of the discount clothing store TJ Maxx, TJX, announced that information from 45.7 million credit and debit cards was stolen. Hackers broke into TJX’s computers systems over the past two months and stole information gathered from about 2,500 TJ Maxx stores, nationwide.

TJX said, in a regulatory filing, that about three-quarters of the cards had already expired at the time of the theft, or data from the card’s magnetic strips had been masked with asterisks.  The company admitted it knows little about the full scope of the breach.  The hackers could have known how to unscramble the data.

A bankruptcy filed by a Muskogee Oklahoma man was recently dismissed. Tennessee officials allege Clayton Smart and his business partner mismanaged $20 million in cemetery trust funds.

Smart’s bankruptcy was dismissed one day before a Tennessee court was to conduct a hearing into whether a receiver should be appointed to manage Smart’s cemetery company. In dismissing the case, a US Bankruptcy Judge said the Tennessee state court system is the best place to resolve the legal matters involving the company, which controls three Memphis Tennessee cemetery and funeral home operations and four cemeteries in Arkansas. Tennessee officials allege Smart filed for bankruptcy to evade regulatory penalties.

Last year, Smart told more than 13,000 people with prepaid burial contracts with his company they would have to pay more. He has blamed inflation and other people’s mismanagement for the additional payments.

A passport clerk has been accused of stealing the names and social security numbers of customers at the Gus Yatron Mail Facility in Reading Pennsylvania. According to court documents, Kim McKnight Jimenez obtained 18 credit cards using the names and social security numbers of postal customers.

Jimenez has not actually used the credit cards. The cards were seized when they arrived at her post office box and she was arrested.

Lawyer Edward Fagan, who has traveled the world collecting multimillion dollar claims for holocaust victims, has filed for bankruptcy in Florida. Fagan has sued everyone from the South African government to the makers of the movie Borat.

Court documents show Fagan owes about $9.4 million to creditors.

Fagan rose to prominence in the mid 1990s when he represented 82,000 holocaust victims and their heirs against businesses in Germany and Switzerland that led to $7.7 billion in settlements. In 2004, Fagan was sued by a client accusing him of suing the wrong party in a personal injury case. In 2005, he was hit by thousands of dollars in sanctions after a federal judge ruled he mishandled a lawsuit against an Austrian bank over the value of artwork looted by the Nazis.

After spending $21 million in the past two years, rumors are flying that pop idol Britney Spears is facing bankruptcy. She is currently in a California substance abuse treatment facility.

Apparently, she has already spent two-thirds of her $32 million fortune and is “scared to death” of the financial situation that faces her when she leaves treatment. A family friend is quoted as saying, “She has to concentrate on staying sober, but she can't do that if she has to worry about going broke - which is exactly what she thinks will happen.”

I know what you’re thinking. I too, wish could worry about going broke with $12 million instead of the $8.32 I have in my pocket.

Symantec, the company that makes Norton Antivirus and Symantec Security Suite software, identified Sweden as a haven for identity theft, second only to the United States.

The company’s study into identity theft showed that 15 percent of the world’s criminal servers are located in Sweden. 51 percent of the world’s underground economy servers are in the USA.

“Underground economy servers are used by criminals and criminal organizations to sell stolen information, typically for subsequent use in identity theft. This data can include government-issued identity numbers, credit cards, bank cards and personal identification numbers (PINs), user accounts, and email address lists,” according to Symantec.

A spokesman for Symantec said that "Carelessness constitutes by far the most common way for details to fall into the wrong hands.”

Modesto California police uncovered a methamphetamine lab during an identity theft investigation. A doctor’s receptionist, Clifford Marci, is being sought for running a meth lab. His boss had noticed unauthorized software on the office computers and called a technician. Marci left the office for a cigarette break and hasn’t been seen since.

Detectives, following up on an identity theft case, discovered the victim was a patient of the chiropractor. They went to an address where credit cards issued in the victim’s name had been sent. Instead of finding the culprit, they found a small methamphetamine lab and other evidence of identity theft related to the chiropractor’s office.

Detectives say they’re sure there will be more identity theft victims identified during the investigation.

A Salt Lake City Utah woman’s identity was stolen from her car in January. Someone had broken into her car and taken her tax return. The thief had racked up $40,000 in fraudulent purchases, including a vehicle, using her name.

Thanks to watching the fraudulent activity in her name, the woman discovered that the thief had rented an apartment with her identity. Not so smart. Police officers went to apartment’s address and arrested a 30-year-old man and a 27-year-old woman on suspicion of identity theft. Police also recovered a truck stolen from Sandy Utah.

New Century’s stock price has dropped more than eighty percent in the past two weeks. The volume of trades in this subprime lender’s stock has skyrocketed in the past week.  The New York Stock Exchange halted trading on New Century, today, after its price reached $1.66 per share, down 48 percent for the day.

“At this point, termination of all lending lines means either they find a sale in the very short term or it's probably bankruptcy,” said Zack Gast, an analyst at the Center for Financial Research and Analysis.

New Century is one of a number of companies that made their fortunes during the mortgage boom, lending money below prime lending rates. Subprime lenders are companies that specialize in home loans to people with weak credit.  Foreclosures have been skyrocketing due to weakness in the housing market and the failure of deals like adjustable rate and interest-only mortgages.

Delta Airlines plans to emerge from Chapter 11 bankruptcy later this spring. Delta plans to give many employees a lump-sum cash payment. Regular employees, not including officers and directors, would receive a payment representing a percentage of their pay. A majority of employees will also receive unrestricted stock in the reorganized Delta.

Leaders of the company will receive other benefits, including restricted shares of stock, stock options, and performance stock.

Delta will also set up profit-sharing and other reward programs. Delta plans to increase workers’ pay to industry standard rates.

Delta’s chief executive, Gerald Grinstein said “Delta's transformation is a remarkable success story from a bankrupt company nearly out of cash to a company that some speculate will once again be the industry leader - and that is certainly our goal.” The workers should share in that success.

Bob Lawless at the Credit Slips blog made an interesting analysis this week based on a comparison of February bankruptcy filings to January bankrupty filings.  At first glance, the increase in filings from January to February appears to be fairly small but, as Lawless points out, there were three more business days in January than there were in February.  On a filings-per-business-day basis, the February figures reflect an increase of more than 17% over January.

Lawless goes on to crunch some other numbers and predict an approximate 30% increase in filings in 2007 over 2006--and the estimate is based on some very conservative assumptions.  The original post is worth a read.

Hillary Clinton’s brother, Anthony Rodham is being sued by the estate of a businessman in a Nashville Tennessee bankruptcy court for repayment of a series of loans. Rodham argues that the $107,000 he received from now-deceased Ed Gregory was not a loan and does not need to be repaid.

The heart of the dispute is whether the $107,000, given to Rodham in a series of checks, were loans or consulting fees. Rodham was a consultant to United Shows of America, a carnival owned by Gregory. Gregory is suing for repayment of the full amount plus interest.

The bankruptcy court judge has set a pretrial conference for March 26, but lawyers believe this issue should be resolved by then.

The Ninth US Circuit Court of Appeals upheld a US Bankruptcy Court’s decision that the seller of web-based software used to prepare bankruptcy petitions qualifies as a “bankruptcy petition preparer.” The Court held that Henry Ihejirika, owner of the now-defunct Ziinet.com violated the bankruptcy code, which imposes certain obligations on bankruptcy petition preparers and penalizes negligent or fraudulent preparation.

Ihejirika, doing business as Frankfort Digital Services, Ltd. and Ziinet.com, sold access to various web sites that guided customers through the preparation of bankruptcy petitions and provided advice on bankruptcy law.

One of his websites, the Ziinet Bankruptcy Engine, represented itself being “an expert system” and claimed to know “bankruptcy laws right down to those applicable to the state” in which the user lived.   The site claimed it could select bankruptcy exemptions for the debtor and offered customers with information on “loopholes” and “stealth techniques,” like how to hide a bankruptcy from credit bureaus. Nonetheless, each bankruptcy petition included the statement that “the contents of my documents are based entirely on my own research and no one gave me legal advice or told me to include or omit any information from my documents.”

After finding errors in a filer’s petition and learning that the filer used the Ziinet Engine, a bankruptcy trustee sued Ihejirika. The Bankruptcy Court ruled that Ihejirika committed fraudulent, unfair or deceptive conduct, and engaged in the unauthorized practice of law. The Ninth Circuit Court agreed saying that Ihejirika engaged in the unauthorized practice of law because the system “touted its offering of legal advice and projected an aura of expertise concerning bankruptcy petitions; and, in that context, it offered personalized—albeit automated—counsel.”

Former Arkansas Congressman Tommy Robinson, who as Pulaski County sheriff once handcuffed inmates to a fence outside a state prison, was jailed along with his lawyer for contempt of court in his bankruptcy proceeding.

Robinson and his attorney were arrested for criminal and civil contempt because they filed a suit in December with the purpose of thwarting an auction that the judge had ordered of a duck-hunting lodge in which Robinson was once a partner. US Bankruptcy Judge James G Mixon said that the lawsuit, filed the day after the auction was scheduled “was a deliberate attempt” to keep the auction from occurring. According to the judge, the suit represented yet another instance of interference with the Bankruptcy Court’s proceedings.

Robinson had been a partner in a duck-hunting lodge owned by Wildlife Farms II, LLC. Robinson, in his suit alleged that Wildlife Farms committed fraud by secretly entering into an agreement with the US Dept of Agriculture to sell a conservation easement on the lodge and then improperly distributed the $1.7 million in proceeds. Wildlife Farms and its owners filed involuntary Chapter 7 bankruptcy petitions against Robinson. Robinson was later declared bankrupt in 2005.

Judge Mixon order the gentlemen to be kept in custody until the court determines that both men have “satisfactorily purged themselves of contempt.”

A mass e-mail is going around. This one is legit. The e-mail is warning people about a telephone scam attempting to steal their identity. It says that con artists, pretending to be court officials, are calling people and threatening them with arrest because they failed to show up for jury duty. When you say that you never received a jury summons, the scammer asks you for your social security number and date of birth, in order to “verify the information and cancel the arrest warrant.”

This scam has effected at least 10 states, including Washington. KOMOTV.com says they found a warning about this jury scam posted on the Seattle Municipal Court website. The warning says that the court will never ask jurors for their Social Security Number over the phone.

Harvard Law Professor Elizabeth Warren and the other professionals affiliated with the Consumer Bankruptcy Project have collected significant data about the American families who file for bankruptcy protection and the reasons they file.  That data has been crucial in painting an accurate picture of the average American bankruptcy petitioner that stands in sharp contrast to the "deadbeat" portrait painted by the credit industry and presumed by the 2005 bankruptcy reforms.  You may even have seen Professor Warren on PBS recently, talking about debt in America, or on 20/20.

Now, the Consumer Bankruptcy Project is expanding its scope, and for the first time reaching for a national sample in its research.  That means bankruptcy petitioners across the country may be contacted or receive a Consumer Bankruptcy Project questionnaire.  If you've filed, or file, for bankruptcy protection and you receive the questionnaire, please consider participating in this important study.

Professor Warren assures us that the study has been approved by the human subjects review boards of several Universities and that all responses will be confidential. 

According to Arizona Attorney General Terry Goddard, Arizona has the highest rate of identity theft in the nation and Mesa is one of the top cities in the state for identity theft. The Federal Trade Commission report on identity theft identifies Arizona as the top state in the country for identity theft with 9,320 victims per 100,000 people. Mesa ranked 3rd in Arizona with 745 victims per 100,000. The Mesa results included cases where crime occurs in Mesa and where the victim is located in Mesa.

Identity theft is a leading cause of bankruptcy in America.

The FTC found that 34 percent of identity theft cases in Arizona were employment related fraud.  Sgt. Mike Goulet of the Mesa Police Department said “Social Security numbers are used by somebody getting employment. I see that occurring all over. Some cases we also get occur over the internet. Individuals are contacted by someone they think is their bank and they reveal passwords and pin numbers.  People should never do that.”

 A news release popped up in my email this morning headlined "Bankruptcy Won't Stop Foreclosure for Troubled Borrowers".   As an attorney who does a lot of research and writing about bankruptcy law, that came as quite a surprise to me.  After all, I knew that Chapter 13 bankruptcy could provide the relief a homeowner needed to catch up past-due payments over time while making current payments.  I also knew that Chapter 7 bankruptcy, while it didn't provide a long-term solution to foreclosure, would in most cases automatically stay foreclosure proceedings temporarily, allowing the homeowner much-needed breathing room in which to assess his options.

So what might that headline mean?  Apparently, this:  "...filing for bankruptcy will not permanently stop a lender from foreclosing on a home if the borrower stops making payments."

In other words, you can't file for bankruptcy, discharge your mortgage debt, and keep your house.  I suspect that's not a big surprise to anyone, and the fact that you don't get a free house in bankruptcy is quite a bit different from the assertion that "bankruptcy won't stop foreclosure".

So why do we so often see these misleading "news" items, spreading the idea that bankruptcy isn't a viable solution for most debtors, furthering the myth that bankruptcy will "ruin your credit for ten years"? 

In the case of this particular news release, it's not hard to guess at the answer.  The only person quoted in the release, and the contact for further information about the release, is Patrick McGilvray of The Home Buying Center, LLC.  A quick glance at  The Home Buying Center's website reveals images strikingly similar to those corrugated plastic signs you see in depressed neighborhoods offering to pay cash for your home fast.  The message in this release seems to be, "Bankruptcy won't save your home, so instead you should avoid foreclosure by quickly selling it to us." 

In other news items, the connection may be more subtle.  The banking and consumer credit industry has a powerful lobby and a massive public relations machine at their disposal.  And bankruptcy isn't the right answer for everyone, nor something that should be entered into without research, professional advice, and an understanding of the options.

But when direct misinformation like, "bankruptcy won't stop foreclosure" and "you won't be able to get credit for ten years after you file bankruptcy" is part of the "news", question the credibility of the source and seek out the unbiased facts.

A New Jersey study found that “There seems to be a continuing misperception out there about the availability of bankruptcy for people.” Since new bankruptcy laws took effect, forbidding some people from filing under Chapter 7, many people who are eligible to file for bankruptcy are afraid to file.

Bankruptcy filings, in fiscal 2006, fell by 39 percent in New Jersey and 37.6 percent nationally, according to figures compiled by the Administrative Office of the U.S. Courts.

Known as the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, the law requires Chapter 7 filers to seek credit counseling and complete a financial management course before discharge of their debts. Filers with an income above the state median ($51,881 for an individual and $90,261 for a family of four in New Jersey) are subjected to a means test to determine if they can pay some or all of their debts through a repayment plan under Chapter 13 bankruptcy.

James J Waldron, clerk of the US Bankruptcy Court in New Jersey, said that “Even those pushed into repayment, [by the new means test] pay back what they can afford to pay, maybe 10 or 30 cents on the dollar, but not the full amount on unsecured debt.”

South Carolina bankruptcy judges upheld a law protecting a greater share of a Chapter 7 bankruptcy filer’s home from unsecured bill collectors. The measure, increasing South Carolina’s homestead exemption, was introduced by State Senator Ray Cleary in response to federal bankruptcy reforms. It was signed into law by Governor Mark Sanford, although he said he was philosophically opposed to it.

Cleary’s law raised South Carolina’s homestead exemption from $5,000 for and individual and $10,000 for a couple to $50,000 and $100,000 respectively. Lawmakers also indexed the homestead exemption to inflation.

Bankruptcy trustees challenged the law in four cases, saying that the Chapter 7 bankruptcy filers were not eligible for the higher exemption because their debt was incurred before the law took effect.

Identity thieves are targeting consumers at the gas pump.  If you leave your door unlocked and your purse on the passenger seat, an identity thief can easily steal your wallet with all your personal information and credit cards.  Within seconds the identity thief can pull up next to your car, open the vehicle door, grab your purse and take off without you ever seeing them.

Watch the Broward County Sheriff's Video to see exactly how it happens.

What happens next may be worse than losing the cash from your wallet.  The identity thief uses your credit cards very quickly to make purchases which can add up to thousands of dollars even before you've noticed your purse is missing.

The identity thieves can also sell your driver's license, social security card and insurance cards to someone who can use them to get medical services on your insurance account or apply for a new credit card in your name.

Arrow Financial Services, LLC of Niles, Illinois was named in a lawsuit alleging deceptive debt collection practices.  Illinois Attorney General Lisa Madigan filed the lawsuit claiming the debt buyer violated the Illinois Consumer Fraud and Deceptive Business Practices Act.

The Illinois Consumer Fraud Bureau received 669 consumer complaints against Arrow since 1999.  Some of the complaints were made by consumers who had emerged from bankruptcy only to have this debt collector attempt to collect debts that were already discharged in the consumer's bankruptcy case.

Any Illinois Consumer who feels they have been deceived or abused by a debt collector can call one of the following numbers:

Chicago: 1-800-386-5438; TTY: 1-800-964-3013
Springfield: 1-800-243-0618; TTY: 1-877-844-5461
Carbondale: 1-800-243-0607; TTY: 1-877-675-9339
Spanish Language Hotline: 1-866-310-8398

Lance Lamb of Diamond Builders filed for an Alaska bankruptcy petition while he still owned the deed to houses paid for by Alaska homeowners.  Diamond builders did not finish the houses and is leaving the future homeowners without homes or money to buy new homes. 

The future homeowners put their home deeds in the builder's name because they did not want to take out the construction loans themselves.  Unfortunately, once the builder declared the Alaska bankruptcy, these families are out the hundreds of thousands they paid for the homes.

The homes are recognized as an asset of Diamond Builders and will not likely be returned to the families when the companies assets are liquidated in the Alaska bankruptcy case.

Just last week the Wall Street Journal reported 40 million debit and credit cards may have been accessed in a data breach at TJX companies.  Now, there are reported incidents of fraud related to the data breach.  So far, identity thieves have used the stolen data to make purchases in Florida, Georgia and Louisiana, Hong Kong and Sweden.

The Massachusetts Bankers Association said it has received reports of fraudulent card use from almost 60 banks.  It is not necessary for consumers to contact their bank if they used their card at one of the TJX retailers such as TJMaxx or Marshalls.  If a consumer's account is found to have been exposed in the data breach, their bank will contact them and issue a new card if necessary.

Nate Dogg who is the cousin of the famous rapper Snoop Dogg filed a lawsuit against Suge Knight's Death Row Records for more than $10 million in royalties.  Nathan Hale, aka Nate Dogg who has recorded with Eminem, 50 Cent, Tupac Shakur, and Ludacris, lodged an adversary proceeding attached to Knight's bankruptcy case.

Knight filed the Chapter 11 bankruptcy petition with the U.S. District Court in Los Angeles last year but did not name Hale as a creditor.  Hale is seeking legal judgment declaring that Knight's debt to the rapper cannot be discharged in the bankruptcy since Hale is not listed as a creditor.

Grammy Award winning singer-songwriter Toni Braxton is not immune to financial problems.  On January 22, 1998, the successful R&B artist filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court in Los Angeles.  Braxton emerged from the Chapter 7 bankruptcy to record seven more albums and appear in two Broadway shows, one motion picture and one sitcom.

Check out our Celebrity Bankruptcy report to learn about other famous people who have filed for Chapter 7 bankruptcy.  Some of them bounce back to become even more successful while others aren't so lucky.

The Associated Press just reported an announcement by Pfizer Inc. that it will cut 10,000 jobs in an effort to decrease costs by $2 billion.  Just last month, the company announced the elimination of 2,200 U.S. sales jobs.  Now the company plans to close three U.S. research sites and two manufacturing plants which will impact nearly 3000 U.S. employees.

The three research sites closing are in Michigan and will result in 2,300 terminations.  The plant closing in Brooklyn, New York will result in 600 terminations and the plant closing in Nebraska will result in only  25 terminations.  Many of the 2,300 Michigan employees will be offered jobs at other locations in the company.

It appears most of the U.S. employees Pfizer has slated for layoff will not be out of work for long and may not need to file bankruptcy in order to overcome the financial burdens a job loss normally triggers.  Not all workers terminated in mass layoff events are so fortunate. 

Consumers who find themselves out of work for extended periods of time may end up unable to pay their monthly bills and may consider filing for bankruptcy to overcome their financial challenges.  Job loss, is a common reason consumers file for bankruptcy.

Brian Ross exposed some of the most flagrant cases of abusive debt collection imaginable last night on his 20/20 investigative report.  Ross played taped conversations between debt collectors and consumers to show how some debt collectors use illegal, abusive methods for collecting debts. 

One debt collector suggested to a consumer that he would go to jail and likely get killed if he didn't pay his bill.  Another debt collector threatened to contact immigration and have the consumer deported for bouncing checks.  Consumers can listen to these and other conversations between abusive debt collectors and consumers at ABC News. 

Certainly, many debt collectors follow the law and do not inappropriately harass consumers to collect debts.  Unfortunately, there are plenty of debt collectors who will say anything, threatening or obscene, to get a consumer to pay a bill.

We will continue to update our website with news of recent federal or state cases against dishonest debt collectors and also provide useful advice for consumers who want to stop abusive debt collectors from harassing them illegally.

Investigative correspondent Brian Ross will expose abusive debt collectors tonight on 20/20.  An online report also describes the findings of the three-month ABC News investigation of abusive debt collectors.  You can even listen to taped phone conversations between abusive debt collectors and consumers.

The dishonest debt collectors highlighted in the report use tactics which are illegal under the Fair Debt Collection Practices Act.  Not all debt collectors use unscrupulous tactics, but you should be aware that some of them will say anything to collect a debt. 

Even if you don't have any outstanding debts or you are just emerging from bankruptcy with a clean slate, you should still be aware of your rights.  In fact, the Federal Trade Commission reported attempts to collect on outdated or invalid debts as the most common complaint among the 66,627 debt collection complaints received by the agency in 2005.

Make sure you know what to do if you are harassed by a debt collector.  Read the Federal Trade Commission's Fair Debt Collection brochure or watch the 20/20 report tonight on ABC to find out how to protect yourself against abusive debt collectors.

Specialty Filaments, Inc. announced Thursday that it will file for Chapter 7 bankruptcy protection.   The filing will take place at the U.S. Bankruptcy Court for the District of Vermont.  The Middlebury and Burlington, Vermont locations have been permanently closed.  All 175 employees received layoff notices effective January 5, 2007. 

Specialty Filaments is on of the world's largest manufacturers of synthetic bristles.  Company officials analyzed the competition and their own financial situation before deciding to file the Chapter 7 bankruptcy petition. The company determined it was unable to compete with international manufacturers who utilize cheaper labor and other resources.  Also, Wells Fargo demanded the company's assets be turned over to satisfy loan agreements.  Since a Chapter 7 bankruptcy essentially liquidates a company's assets, the lender is more likely to see some portion of its loan repaid.

Sprint Nextel announced the mass layoff this week after news that the company lost 306,000 subscribers during the fourth quarter of 2006.  The wireless carrier, which just merged in August 2005, plans to continue cost structure cuts to adjust to changing demands in its wireless network.

Sprint officials did not disclose which employees would be part of the mass layoff but did say the workforce reduction would take place in the first quarter.  It is difficult to predict how many of those laid off will be able to find other jobs and how long their unemployment will last.  We do know that job loss is one of the most common events that lead consumers to file a bankruptcy petition.