One of the many bankruptcy-related misconceptions is that a person’s credit record is irreparably and completely damaged once he has filed for bankruptcy.  That may not necessarily be true.

In fact, if you have filed for foreclosure in the past, you may not necessarily be automatically disqualified from another mortgage.  Earlier rules held that a person who filed for a foreclosure or Chapter 7 bankruptcy would have to forget about obtaining any kind of other financing for the next 7 years.  However, those rules, for the most part, have been relaxed a little.  Now, the rule says that that you might have to wait for just about 3 years.

That doesn’t mean that you can simply walk away from a foreclosure and into a brand-new mortgage.  There are a number of factors that must be considered before you can qualify for another mortgage.  One of these factors is the reason why you lost your house to foreclosure in the first place.  If your reasons are acceptable, you may not even have to wait very long to get another mortgage.

In fact, it is much easier to bounce back after bankruptcy or foreclosure, if your bankruptcy was the result of certain circumstances over which you have no control.  For instance, if the bankruptcy was the result of a serious illness, or medical debt, it may not affect your credit score as badly because illness is something that you have little control over.  Another acceptable reason for a foreclosure or bankruptcy could be the death of the main income earner in the family.

In an interesting new decision, two national restaurant chains have been ordered to inform their employees and other creditors about all details related to the operating companies’ Chapter 11 bankruptcy filings.  The companies that operate the 2 restaurant chains had quietly filed for bankruptcy, without informing their 1400 employees.

The companies had filed for bankruptcy in the U.S. Bankruptcy Court in Oakland.  The original bankruptcy filings made no mention of the names of the restaurant chains at all.

Currently, there is no federal law that requires that companies inform all employees before they file for Chapter 11 protection.  However, the fact is that most of the time, employees do find out that the company has such plans in place.

In this particular case, the 2 companies that operated these chains, Fiesta Holdings Inc. and Eateries Inc., specifically asked the court to exempt them from having to inform their bankruptcy-related developments to everyone, and asked the court to allow them to inform just a handful of creditors about all major milestones in the bankruptcy.

However, most bankruptcy courts do require that companies that have filed for Chapter 11 bankruptcy protection notify those companies and persons who feature in the company’s biggest creditors’ list.  In this case, the creditors’ list included several secured creditors, vendors and employees. The reasoning behind requiring a company to notify all creditors about all bankruptcy-related developments is that very often, creditors may not even know that a company is undergoing restructuring.

It is extremely important that companies follow all rules and regulations when they file for bankruptcy.  Full disclosure and transparency are extremely important in such matters.

It is one of the bigger companies to cite the effects of Superstorm Sandy in its bankruptcy filing.  The company that owns the clothing stores Mandy, Annie Sez and Afaze recently sought Chapter 11 bankruptcy protection.

The company Big M. Inc. made clear its intention to sell its business in a statement released after the bankruptcy filing.  According to the company, it intends to maximize the value of its businesses and properties, which indicates a sale in the offing.

The company had been floundering, even before Sandy hit last year.  The restructuring process began in 2011, and company’s troubles were blamed on the financial downturn and the recession.  Many of the stores became unprofitable, as people stayed home, preferring not to spend their hard-earned money.

Business eroded as a result, and the company took a number of steps to stay afloat.  Those steps included refinancing and cutting down on expenses and overheads.  Several properties of the company were sold, and stores that were not performing well were also shut down.  As many as 27 stores were shut down last year alone.

Then Sandi hit in late October.  New Jersey bore the brunt of the storm, and for at least a week, several Big M stores were shut down.  The offices and distribution center of the company were also shut down during this period of time.  In at least 3 of the cases, the stores were shut down for as long as a month.  Even now, those stores are operating on a limited basis.

The company now says that it spent much of its money trying to get the stores back in operation, but has found that business hasn’t picked up even after Sandy.

Battery manufacturer A123 Systems, which filed for bankruptcy recently, has a buyout bid by a competitor looking for a buyout.  That should not make news, except that the bidder in question is a Chinese company.

In 2009, the A123 Systems received a $250 million grant from the federal administration to help it stay afloat.  However, those measures did not work and the company recently filed for bankruptcy protection.  It now finds itself the target of a buyout by Chinese competitor, Wanxiang Group Corp.

Wanxiang has emerged as the main bidder for A123 Systems, and the auction itself has been shrouded in secrecy.  The federal administration maintained that it should have a say in the auction, but the auction was held at the offices of the company’s bankruptcy law firm, and it was announced that Wanxiang had won the bid.

Lawmakers are extremely concerned about the bid because A123 Systems does have several defense contracts with the US military, and some of these contracts are worth millions of dollars.  Lawmakers are especially concerned that sensitive military information could land in the wrong hands.

According to Michigan Republican Rep. Bill Huizenga, the military defense contracts with A123 Systems involve sensitive information like military vehicles, unmanned ground and portable power systems, advanced armor, and power grids.  The fear is that foreign agents working through Wanxiang could gain access to sensitive military information.

Information that the government contracting business of A123 Systems would not go to the Chinese company but to another American company, do not seem to have placated lawmakers thus far.

Students, who have taken out a loan to finance their education, often find that they have trouble finding a job to make their loan payments after they graduate.  Those financial troubles are simply compounded, even posing a bankruptcy risk, when the same students also rack up high credit card bills.

Unfortunately, credit card debt is fairly common among college students, who do not have the financial maturity necessary to understand how such massive bills can affect a person’s credit score as well as his financial future.  According to some reports, college students are generating massive amounts of credit card debt, and the average undergraduate student is believed to carry around at least $2, 500 in credit card debt.  These students are still studying, and it will be a couple of years before they can graduate, and can begin looking out for a decent job.

However, once they graduate, many students very often find that the job market isn’t as welcoming as they expected it to be.  Not only are their kind of jobs hard to find, but these jobs com with lower than expected salaries.

That has been the situation since the recession hit, and although things are slightly better now, students cannot expect to be blasé about their financial future.   Students graduating with huge student loans will find that the stress of making payments on their student loans is compounded by credit card bills.   Living expenses are much higher now, making life a bigger financial struggle for fresh graduates.  Those struggles amplify if you have massive credit card debt too.

Credit card bills can take very long to pay off, and even if you make minimum payments, it will take years before you manage to pay off a $2,500 credit card bill.  This is high-interest debt, and must be avoided.

After 4 years of Chapter 11 protection, the Tribune Company, which owns Chicago Tribune and several other publications, is due to emerge from bankruptcy.

On December 31, the company which also owns the Los Angeles Times, will end 4 years of bankruptcy protection, and begin the process of selling off many of its assets, including its newspapers.  The company expects that it will emerge from Chapter 11 bankruptcy production with all of its assets, including at least 8 newspapers, and several television stations.

Some of those newspapers will be sold off, and at least one major investor, a certain Mr. Warren Buffett has indicated interest in buying at least one newspaper from the group.  Upon its emergence from bankruptcy, the Tribune will transfer all of its broadcast licenses to the controlling owners, which include J.P. Morgan Chase & Co., Oaktree Capital Management and Angelo Gordon & Co.

The company’s decision to dispose of its print newspapers has not surprised bankruptcy experts, who have noted similar decisions being made by other print publishers facing tough times in the industry.  Declining readership rates across the country as well as a corresponding drop in advertising revenues have meant that many newspapers, including the New York Times have been struggling to survive.  More such bankruptcy-related stories from the newspaper industry are likely to emerge.

According to the Newspaper Association of America, the newspaper industry lost almost 50% of its advertising revenues over the past 5 years alone, indicating more troubling times for the industry, and more examples of companies giving up outdated modes of information delivery.

The Supreme Court has refused to resolve a question that often confuses companies that are considering buying out other companies with trademarks after a bankruptcy -what happens to those trademarks after the company that owns them goes into bankruptcy?

The question was raised by a case involving Lakewood Engineering and Manufacturing Co., which manufactured box fans.  The manufacturing of these fans was outsourced to a company called Chicago American Manufacturing.  Lakewood Engineering then went into bankruptcy, and the bankruptcy trustee rejected the supply agreement that the company had with Chicago American.  Lakewood’s assets were then  sold to Jardin Consumer Solutions.

However, Chicago American Manufacturing continued to manufacture the box fans, under the Lakewood trademark.  The bankruptcy trustee then sued Chicago American Manufacturing.  Jardin Consumer Solutions also filed a patent infringement lawsuit against Chicago American.

The bankruptcy court found in favor of Chicago American, ruling that even though the contract was rejected by the bankruptcy trustee, Chicago American had the right to continue to use Lakewood’s trademark.

That finding was later confirmed by the 7th US Circuit Court of Appeals.  In this ruling, the court broke with an earlier decision which had held that when a licensing agreement is canceled, it automatically terminates the rights to intellectual property of the debtor.  The 7th US Circuit Court Of Appeals therefore broke with the early court filing.

The United States Supreme Court was then brought into the matter.  Jardin Consumer Solutions petitioned the Supreme Court to hear arguments in this matter.

However, the Supreme Court has refused to hear any arguments in this matter, leaving the question of the ownership of the trademarks after a bankruptcy without a strong answer.

The federal administration will soon begin monitoring the debt collection industry, even as complaints about debt collection harassment continue to increase.

According to the Federal Trade Commission, last year alone, the agency received more than 150,000 complaints from consumers about harassment by debt collection agencies.  That could soon end as the government gets more involved in policing debt collection agencies, and protecting consumers from such harassing tactics by these companies.

Beginning on January 2, the federal government will begin tracking debt collection agencies, focusing on some of the larger agencies in the country.  The Consumer Financial Protection Bureau will ensure that these collection agencies do not harass consumers, and will also focus on large firms that deceive customers into paying a debt.

If you have already filed for bankruptcy, then the debt collection agency is not allowed to collect debts that have already been included in your bankruptcy papers.  Additionally, if you have filed for bankruptcy, and your case is currently in court, the debt collection agency is not allowed to continue its collection activities.  In other words, if you have already filed for bankruptcy, and are awaiting the outcome of these proceedings, you should not be receiving any phone calls from the debt collection agency.  If you continue to receive such calls, you must contact an attorney.

Inform the debt collection agency that you have already filed for bankruptcy, and ascertain that the debt is included in the list of creditors and debt that has been filed with the bankruptcy court.  From now on, your debt collection agency should be in contact with your bankruptcy attorney, and not with you.

A lawmaker has introduced a piece of legislation that is aimed at requiring companies in bankruptcy to honor outstanding gift cards.  The bill is called the Gift Card Consumer Protection Act, and has been introduced by Sen. Richard Blumenthal.

The bill requires companies that are in bankruptcy proceedings to avoid selling any more gift cards.  The bill would also require that such gift cards not carry an expiration date, and that companies accept and honor non-redeemed gift cards.  Under current law, an expiration period of 5 years is allowed.

The question of what happens to gift cards when a company goes into bankruptcy, burst into the spotlight recently after the Borders bankruptcy filing.  Several customers who held Borders gift cards claimed that they were not aware that they could not use the gift card after the company went into bankruptcy.  However, the retailer insisted that it had done everything in its power to make customers aware that they should either use the gift cards, or file claims for recovery of unredeemed amounts.

A number of other retailers like Ski Market have also had similar issues with gift cards after they filed for bankruptcy.  In several cases, persons holding these gift cards have had nightmarish experiences.  For instance, Sharper Image customers were forced to spend more than twice the amount of their gift card, and then had to go to court in a messy lawsuit to recover the value of their cards.  They finally received their payment, only about 3 years later.

According to Sen. Blumenthal, this new bill would eliminate the “draconian” deadlines, user fees and other abusive charges that result in consumer losses, after a company goes into bankruptcy.

Just as the housing market is beginning to recover, a small group of homeowners is faced with the looming prospect of foreclosure.  Across the country, widows, who recently lost their husbands, are now faced with the prospect of losing their homes to foreclosure, because of fine print in mortgage loans that deny them the chance for mortgage loan modification.

The fine print on their mortgage documents denies widows the chance to take over the mortgage from their husbands after the death of the husband, unless they are current on their payments.  However, in many cases, these mortgages are many months overdue.

This is especially so in those cases where the husband had suffered a long and chronic illness before he died, resulting in heavy medical expenses.  These loans are usually overdue, and widows find that because of this, they may not be able to take over the mortgage of the husband.  In other words, they are not eligible for mortgage modification.  The spouses are now trapped due to no fault of their own, and have to deal with the possibility of losing their home, in addition to the trauma of losing a life partner.

This is part of the reason why bankruptcy attorneys have found an increasing number of foreclosures affecting persons in their 50s.  According to statistics by the American Association Of Retired Persons, in this category of people, foreclosure rates increased by approximately 23% between 2007 and 2011.  That has resulted in close to 1.5 million foreclosures, according to the New York Times.

The Consumer Financial Protection Bureau has been taking note of the increasing number of foreclosures that are affecting senior citizens, especially widows.  Housing advocates have been petitioning the bureau to develop guidelines that would provide lenders a broader framework of their responsibilities when dealing with surviving relatives.