Rusty Law

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Bankruptcy is just a tool in the toolbox when it comes to wealthcare reform; however, it is becoming increasingly popular.  There were 32% more bankruptcies filed in 2009 than in the previous year, which could continue to increase this year, especially in Chapter 11 cases.  Commercial real estate bankruptcies could be the new red on the catwalk of financial fiasco.  

General Growth Properties Inc. recently opened a new trend, filing the largest commercial real estate bankruptcy ever in the US, plummeting from nearly $30 billion in assets in the first quarter of 2009.  And as it filed for bankruptcy, so did 166 of its subsidiaries.  By the year 2018, an estimated $1.97 trillion in similar commercial real estate loans will mature.  As with residential properties, the corporate borrowers face the challenges of devaluation, low occupancy (which decreases income from rent), and refinancing harder to come by.  However, unlike residential loans on 20 to 30 year terms, commercial real estate loans are generally arranged on a five to seven year term with a balloon payment at the end.  Thus the fatal imbalance between means and obligation is becoming more one-sided.  

Whether you are a giant commercial property or a single household, bankruptcy is an individual issue.  There are costs and benefits involved, and you need to be aware of both.  Financial hardship is often a situation seeking quick answers, but one that needs careful steps.  

Tithing Through Bankruptcy

Render unto Caesar…however, in bankruptcy Caesar does allow for charitable contributions to a religious organization.  

“Tithe” is an Anglo-Saxon word for tenth; however, Chapter 7 and 13 bankruptcy rules allow for up to 15% of the debtor’s gross yearly income to your place of worship.  Furthermore, a tithe listed in bankruptcy does not have to be based on the pre-bankruptcy amount the debtor was giving, but should be based on what the debtor plans to give in the future.  The bankruptcy will alleviate some of that overwhelming financial pressure, allowing you to give a more generous helping to the offering plate.  

Thus bankruptcy code shrinks Caesar’s ghost in the light of stained glass windows and allows us to be financially faithful beyond the salad days of our Recession.  

Bankruptcy

If you have been bitten by the right snake, you file bankruptcy.  There are consequences, however, that you need to understand.  Get counsel from someone who represents the person—not the title company and not the real estate agent.  You need to customize the solution to fit your situation.  Bankruptcy is a powerful tool, but it is not for every job.  

Bankruptcies come in different chapter numbers, some luckier than others, but luck is irrelevant if that chapter is the right fit for you.  A Chapter 7 Bankruptcy is a liquidation where your property goes to a trustee.  A Chapter 13 Bankruptcy is a long term plan that separates your living expenses from your disposable income, and the disposable income goes toward your debts.  A Chapter 11 Bankruptcy is for companies where you do not have a trustee; instead, you deal with a group of creditors.  

Bankruptcy is an individual issue.  Good counsel will look at the equity involved and look at what else is going on, like your credit card situation.  Bankruptcy is just a tool in my toolbox, and sometimes it is the best thing.