Orange County Chapter 7 Bankruptcy Filings: Top Ten Cities for December 2009

January 8, 2010 · Posted by Alex

The last month of 2009 brought with it familiar top ten cities with the most Chapter 7 bankruptcy filings in Orange County.

Research done by an Orange County bankruptcy law firm concluded that last month (November) the top ten cities were: Anaheim, Costa Mesa, Fullerton, Garden Grove, Huntington Beach, Irvine, Mission Viejo,  Newport Beach, Orange, and Santa Ana.  For December, the only change to the list was that Aliso Viejo is in and Newport Beach is out.  So for December 2009, here are the top ten Orange County cities with the most chapter 7 bankruptcy fililngs:

Aliso Viejo, Anaheim, Costa Mesa, Fullerton, Garden Grove, Huntington Beach, Irvine, Mission Viejo, Orange, and Santa Ana.

Other Orange County cities in which chapter 7 bankruptcy attorneys have seen a high number of filings for December include: Buena Park, Laguna Niguel, and Rancho Santa Margarita.

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Consumer Bankruptcy Filings Rising in Southern California

June 29, 2009 · Posted by Alex

From Curtis Law Group’s blog:

“As reported in the Los Angeles Times yesterday, southern California has seen a dramatic increase in the number of consumer bankruptcy filings of late. The article referenced the mortgage crisis as the culprit, while also highlighting the fact that changes to the Bankruptcy Code in the Bankruptcy Bill of 2005 have seemingly failed to reduce the number of bankruptcies these last few years.

Although the article emphasizes the increase in the greater Los Angeles area, bankruptcies in Orange County, Riverside County, and San Bernardino County have also risen dramatically in the past year, flooding bankruptcy attorneys in southern California with inquiries from debtors about whether they qualify for Chapter 7 bankruptcy, or whether they must resort to Chapter 13 of the Bankruptcy Code for relief.”

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One Reason Why Debt Reduction Plans Aren’t As Good As They Sound

June 13, 2009 · Posted by Alex

Like most people, when I drive to work in Irvine every morning I surf the various local radio stations. I’ve noticed a lot more advertisers for debt reduction plans, sometimes called debt elimination or debt negotiation, lately. The fact that they advertise on the radio tells me that the current financial stress is impacting everyone – whether living in Rancho Santa Margarita, Santa Ana or Newport Beach.

But debt reduction plans are not always as helpful as they might sound. Why? Debt forgiveness doesn’t eliminate as much debt as you might think. The reason: Borrowers must often pay high fees and pay income tax on the forgiveness of debt.

You see, debt forgiveness is usually considered to be a taxable event, because a taxpayer is deemed to have gained something (income) by not having to pay back the debt. So, our U.S. and California tax laws impose a tax on forgiveness of debt “income.”

The taxes are often waived if the forgiveness of debt occurs while the borrower is insolvent or bankrupt (filing a bankruptcy is not required), so it doesn’t always impact every debtor, but here’s an example of how it might affect a typical borrower:

Net Benefit of Debt Reduction Plan

$100,000 Total Debt
$40,000 Reduced Debt (expected payoff)
$15,000 Debt Reduction Fees (attorney/debt consultant fees)
$16,200 Forgiveness of Indebtedness Tax (see below)
$71,200 Total Payments After Debt Reduction

$28,800 Net Benefit After Debt Reduction

Forgiveness of Indebtedness Tax Calculation

$45,000 Taxable Forgiveness of Indebtedness (forgiveness of debt less fees)
$12,600 Federal Tax for Forgiveness of Indebtedness (assumes 28% tax bracket)
$3,600 State Tax for Forgiveness of Indebtedness (assumes CA 8% tax bracket)

In this greatly simplified example, a borrower paying a 15% fee on a $100,000 debt reduction plan and who must pay typical income tax rates on the anticipated 60% forgiveness of indebtedness “income” would only benefit by approximately $28,800. Although it is a benefit, it’s far less than the “60%” reduction amount that most people expect when they hear a radio add promising a reduction of “up to 60%.”

Something to think about before deciding to sign up for a debt reduction plan…

For more info on debt elimination, debt negotiation, or debt consolidation services, or to find out about how these services compare to bankruptcy, visit Curtis Law Group

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GM Files for Chapter 11 Bankruptcy Protection

June 1, 2009 · Posted by Alex

Prospective car buyers and GM car owners take note — GM has just filed for Chapter 11 bankruptcy protection.  The survival of Orange County GM dealerships is unclear, but will be determined over the next two or three months, which is approximately how long the restructuring is expected to take.  Orange County GM dealerships are located in: Anaheim, Buena Park, Costa Mesa, Foothill Ranch, Irvine, Laguna Niguel, Tustin, and Westminster.

From the Los Angeles Times online:

President Obama said that pushing General Motors Corp. into bankruptcy today was a painful but necessary step to revive the legendary automaker, saving thousands of jobs and avoiding another direct hit to the struggling economy.

“‘Working with my auto task force, GM and its stakeholders have produced a viable, achievable plan that will give this iconic American company a chance to rise again,’ Obama said at the White House just hours after the company filed for bankruptcy protection this morning in a Manhattan courtroom…

‘Simply loaning GM more money, instead of taking equity in the company, would have continued to saddle GM with ‘irresponsibly large debt,’ the reason the company is in its current dire position, Obama said.

‘We are acting as reluctant shareholders because that is the only way to help GM to succeed,’ he said. ‘What we are not doing, what I have no interest in doing, is run GM.’”

For More Information on this and other bankruptcy news, visit  Curtis Law Group

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Republicans Holding Up Bankruptcy Bill in Senate

March 30, 2009 · Posted by Alex

From the Legal News section of Curtis Law Group’s website:

“Congressional Democrats in the Senate are trying to pass a bankruptcy bill, coined as a “cramdown” bill by opponents of the legislation, which aims to help stem the tide of foreclosures by giving bankruptcy judges the discretion to modify mortgages for homeowners who otherwise cannot afford their homes.

The House of Representatives have already passed a version of this bill, but Republicans are holding it up in the Senate. The Senate has decided to put off the vote until later in April, while changes to the bill are negotiated.”

For More Information: click here

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