Archive for the ‘Bankruptcy Decisions’ Category

To Stay or Go: Walking Away From An Underwater Mortgage

Friday, December 11th, 2009

I’ve read a number of articles recently about home owner’s strategically walking away from their homes as a result of zero or negative equity (you owe more than the house is worth). For some this decision is very easy, some triggering event (loss of job, reduced overtime, cut in pay, major illness) has made it impossible to pay the mortgage. For others, the decision is often a gut wrenching.

Arizona law professor Brent T. White recently wrote an article Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis addressing this group of homeowners’ dilemma. He writes that many of these families’ decisions arebased on: 1) the desire to avoid the fear and shame of a foreclosure; (2) or exaggerated anxiety over the consequences of a foreclosure. Although he does not pinpoint the real issue (emotion), the article does a good job of analyzing the homeowner who continue to pay on mortgages that exceed the value of the home, compared to businesses or investors who would make an “economic” vs. “emotional” decision.

Regardless of who you ask the decision is a very difficult one. I encounter this question almost weekly in my practice and there is no easy answers. It is also true that guilt, shame and embarrassment are prime motivating factors in staying in a house that has negative equity or one that you can’t afford. The emotions of guilt, shame and embarrassment regarding your finances are often solitary ones that eat away you and your family until it becomes to much to handle on your own.

If this describes your situation, call my office today, and we will discuss your financial situation in detail, including making difficult decisions. My law office offers interpreting in native Spanish and Punjabi for our bankruptcy clients.

Fresno Bankruptcy Info: Longtime Fresno Carpet Business Files Bankruptcy

Saturday, October 3rd, 2009

It was announced yesterday that long-time Fresno carpet business A & M Flooring, Inc. filed for Chapter 11 bankruptcy protection. The case was filed in the Fresno bankruptcy court.

According to news sources, the company which operates both the A & M Flooring USA and Big Bob’s New & Used Carpet stores will seek to reorganize its debts and continue operation.

The company has laid off 24 employees and closed two locations in an effort to cut costs, but the 70 year old Fresno business has sought bankruptcy protection in an effort to continue and survive during this economic downturn.

Chapter 11 bankruptcy affords corporations and high net worth individuals the opportunity to restructure their debts while continuing operations.

The company will propose a repayment plan to the bankruptcy court and if approved and successfully implemented the company could “emerge” from bankruptcy down the road.  Unlike Chapter 7 bankruptcy (which is a liquidation of the company’s assets), Chapter 11 reorganization allows the company a workout plan that may not be otherwise be available outside of bankruptcy.