Minneapolis Bankruptcy Attorneys Blog

New statutes passed to prevent scammers from bankrupting Minnesota seniors

2013-05-22T15:48:00Z

If you've lived in this state for any amount of time you've more than likely heard the term 'Minnesota nice.' But while this term usually refers to our state's exceedingly friendly disposition, it is apparently becoming a targetting tool now for scam artists the world over. And these scammers are getting even more clever in their schemes, targeting our elderly population at an alarming rate.

It's a problem state lawmakers have been keeping their eyes on for quite sometime. And as they wrapped up the 2013 session recently, lawmakers decided to finally do something about these scammers and their propensity to force Minnesota seniors into bankruptcy.

]]> The new statutes were designed to make it harder for seniors to transfer money to scammers and even more difficult for scammers to collect the money as well. According to DFL Rep. Joe Atkins, the statutes will not allow money transfers to locations other than the original destinations. If someone tries to send that money someplace else or someone else tries to pick up the money without your consent, a notification will immediately be sent to you reguarding the transfer.

Lawmakers have also created a "do not send" list which will allow elderly people and their relatives the ability to make it so that their bank accounts do not allow wire-transfers in the future.

Recent data suggests that there were over 100,000 scam victims in Minnesota alone last year, with a total estimated loss of nearly $5 million. There's no telling how many of these people had to file for bankruptcy as a result. The hope now is that the new statutes will lower these numbers and prevent scammers from using our 'Minnesota nice' against us.

Source: Public News Service, "Too Minnesota Nice? MN is Top State Targeted by Scammers," John Michaelson, May 20, 2013

What happens if Minnesota's first copper-nickel mine goes under?

2013-05-16T18:00:00Z

Residents in northern have long-awaited the environmental report that would dictate whether PolyMet could be the first company to operate a copper-nickel mine in the state. Scheduled to be an open-pit mine, concerns over the mines environmental impact during operation were the main concerns on activists minds. Now, the fear of bankruptcy and its environmental cost could be what prevent the project from getting off the ground.

Environmental groups have long expressed their concerns about copper-nickel mining in the state, mostly focusing their efforts on sounding the alarm about the harm this type of mining can have on ground water and surrounding soil. But the new issue is concerning whether there is a plan in place if there ever comes a time when Polymet closes abruptly or files for bankruptcy.

]]> Although most companies in the state don't have to worry much about their environmental impact when they file for bankruptcy, production facilities and industrial industries such as mining must navigate strict environmental laws that can often times be more cumbersome than filing for bankruptcy.

PloyMet shares the same concerns as most critics, pointing out that the new mine will not only create 350 new jobs in northern Minnesota but could produced exstensive spinoff businesses as well. Looked at as a huge boost for the state's economy, bussiness owners are working hard to quell all concerns and keep the prospects for the mine on the horizon.

The company says that it has already made extensive changes to its original plan based on the original environmental report and is expected to continue improving on its plan until everyone is satisfied with the results.

Source: The Pioneer Press, "Northern Minnesota: PolyMet environmental report sent to regulators," The Associated Press, May 14, 2013

Archiver's files for Chapter 11 bankruptcy protection

2013-05-08T18:18:00Z

In 1999, Twin Cities entrepreneur Bruce Thomson cashed in on the popularity of scrapbooking and opened the Golden Valley-based chains known as Archiver's. The company was an immediate success and appeared to be on the up and up. But a tough economy and a shift towards digital media began to cut into the company's profits, forcing them further and further into debt.

Now, just weeks after the St. Cloud-based scrapbooking company Creative Memories filed for bankruptcy, CEO Jann Olsten announced that Archiver's was going to be following suit and has since filed for Chapter 11 protection for debt relief.

]]> Olsten explains that the company tried to reduce expenditures by reducing its workforce at both its headquarters and at the store level but had continued to struggle financially in a weak economy. At present time, the company reports that it owes approximately $10 million to at least 200 creditors. Olsten says that even if the Minnesota Bankruptcy Court grants their petition for bankruptcy protection, Archiver's will still be forced to close several of its locations On the plus side, Olsten points out, filing for debt relief allows the company to renegotiate its store leases which could save more locations from being forced to close.

It's not clear at this time how Archiver's will restructer to avoid a financial crisis such as this from occruing again in the future. Recently, Archiver's had tried its hand at digital scrapbooking but with little success. But with the market moving in that general direction, there is a strong possibility that it could try it again by rebranding itself.

Source: Twin Cities Business, "Scrapbooking Chain Archiver's Files for Bankruptcy," Rebecca Omastiak, May 1, 2013

Recent class actions could change medical debt collections

2013-05-03T18:19:00Z

Minnesotans are familiar with the fact that medical costs are rising at a staggering rate. Even if you have medical insurance coverage, it often times does not cover all of the medical costs associated with a trip to the hospital. As a result, people around the state, as well as across the country, are falling into personal debt because of their medical bills. While most debt collection involves the healthcare facility itself, some people are finding that their debt is being sold to debt collectors who may not be as friendly when trying to collect what is owed.

But with recent class action lawsuits highlighting violations of the Fair Debt Collection Practices Act by some debt collectors, outcomes in these cases could make a huge difference for people suffering from crippling personal debt and how debt collectors are allowed to handle medical debt collection in the future.

]]> In all of the cases, medical bills that were incurred by the patients were submitted to their insurance companies after their medical treatment. What wasn’t covered by insurance was then billed to the patient. When the medical providers had not received payment, the debt was turned over to collection agencies that allegedly followed up on the collection process. But according to the plaintiffs in the lawsuit, the debt collectors violated the Fair Debt Collection Practices Act in the process.

The Fair Debt Collection Practices Act is a federal law that protects debtors from abusive creditor behavior and unfair collection practices. During the collection process, the plaintiffs claim that the agencies used misleading, deceptive, and unfair practices by filing civil lawsuits against the plaintiffs. According to the plaintiffs, the agencies advised hospitals how to file legal claims against the plaintiffs and consolidated the debt into a single claim versus the allowed single lawsuit per bill.

For Minnesota residents, the simple fact that this class action was filed could have a significant impact on how hospitals and the healthcare industry use collection agencies. Because medical debt is among one of the top reasons for filing for bankruptcy, the hope is that these cases can address that problems still exist in the system and hopefully remedy the situation as well.

Source: The National Law Review, “Class Action Lawsuits Target Medical Collections,” Randall J. Groendyk, April 5, 2013

As if bankruptcy and foreclosure weren't bad enough...

2013-04-24T19:00:00Z

When the housing market bubble burst a few years ago, homeowners across the United States, including here in Minnesota, watched as the resale value of their home dropped. Coupled with a relentless recession that cost millions of Americans their jobs, banks across the nation began foreclosing on thousands of homes.

But as if bankruptcy and foreclosure weren't bad enough, millions of homeowners learned that some of the nation's largest banks had wrongfully evicted people from their homes, which eventually led to a federal investigation. It took more than two years before the investigation into the foreclosure abuse was completed, after which homeowners were finally able to recoup their losses in the form of a class-action lawsuit.

]]> Despite reaching a settlement of $3.6 billion in January, the firm in charge of distributing the mortgage relief checks has been slow to distribute the much needed funds. It wasn't until this month that the first round of checks were distributed, but with this good news also came bad news: there was no money in the account.

According to sources, the firm in charge of handling the check distribution had not placed funds into the account from which the checks were assigned. As a result, at least one million people who tried to cash the checks were told that there were insufficient funds and were not able to cash or deposit the checks. Advocates for the foreclosure-abuse victims say that they have been receiving calls from settlement beneficiaries for days now, all confused and frustrated by the process. It's understandable, some would say, considering many of these people have been waiting for these relief checks to help get them out of a financial crisis that has gone on for far too long.

Source: The New York Times, "Mortgage Relief Checks Go Out, Only to Bounce," Jessica Silver-Greenberg and Ben Protess, April 17, 2013

FBI investigations force The Scooter Store to file Chapter 11

2013-04-17T17:30:00Z

Nearly everyone in the state of Minnesota is familiar with the current scooter ads on television. Companies such as Hoveround and The Scooter Store have become common household names, offering motorized mobility to people at little to no cost.

But these two companies have received increased scrutiny from legislators who feel that the ads are pandering to people who may not need the devices, which is forcing Medicare to pay millions of dollars every year to these companies. As a result, the Federal Bureau of Investigation has issued several raids on these companies, including one raid in February on The Scooter Store. In a release made by The Scooter Store this month, they explain that it is because of these raids that they have been forced to file a petition for Chapter 11 bankruptcy.

]]> While Chapter 11 bankruptcy will allow The Scooter Store to purge an estimated $50 million in debt, the restructuring of the company will also allow it to stay in operation. The company explains that changes in healthcare laws and the criminal investigations into the former management team have caused them to fall into a financial crisis.

The company intends on selling off a substantial amount of its assets, which will total less than $10 million, to pay off its creditors. In the past, The Scooter Store has received millions in reimbursement for scooters from Medicare; but after the restructuring, it's not clear whether this will be the case anymore. At present time, federal agents are looking over past business practices which include billing and reimbursement to see if everything was legitimate. The government will then make their decision regarding future Medicare reimbursement once they have completed their investigation.

Source: Mysanantonio.com, "Scooter Store staying in business," Patrick Danner, April 15, 2013

Despite increased need for healthcare, more doctors filing for bankruptcy

2013-04-10T18:00:00Z

When we think about the current state of healthcare in the United States, we think of it being particularly healthy. No pun intended. But depending on who you ask, this may not necessarily be the case in every state. And despite the increasing need for healthcare over the past few years, many solo practitioners, who were hit hard by the recession, are now finding it hard to pay off all of their debt.

According to the co-chair of the American Bankruptcy Institute's healthcare committee, Chapter 11 bankruptcy filings among physician practices have spiked recently, leading some business experts to question how stable the healthcare industry really is.

]]> According to many of the practitioners who have already filed for bankruptcy in the recent months, the reason for filing had a lot to do with how their patients are deciding to spend their money. As with many people across the nation, patients here in Minnesota are still trying to get back on their feet after the recession, choosing instead to make fewer trips to the doctor's office in an effort to save some money.

Rising costs of malpractice insurance and shrinking insurance reimbursements are not helping the situation, say many practitioners who point these out as other factors that are leading them into financial ruin.

But when a practitioner closes because of bankruptcy, it's not just the doctor who is affected. As some bankruptcy experts have been quick to point out, a practice closing because of too much debt often times leaves hundreds if not thousands of patients scrambling to find alternative healthcare. And in some cases, the cost of travel to get to a new doctor's offices may outweigh the cost of receiving healthcare in the end. It's an outcome no doctor ever wants to see but usually can't help when faced with such dire financial situations.

Source: CNN Money, "Doctors driven to bankruptcy," Parija Kavilanz, April 8, 2013

Dionne Warwick tries to 'walk on by' her debt with Chapter 7 relief

2013-04-03T18:00:00Z

Most people in the state of Minnesota have a very distinct impression of celebrities and professional musicians. For the most part, we idolize them for their talent but secretly are jealous of their enormous wealth. While many families still struggle to find their feet after the recession, famous people can rest easy knowing that they have a cushion of assets to fall back on.

Or at least that's what we'd like to think.

]]> But sometimes this isn't the case and we discover that the people we thought were financially set are in the same boat as we are. Such is the case with the famous singer Dionne Warwick who filed for Chapter 7 bankruptcy last month after failing to strike a deal with the Internal Revenue Service.

Despite filing taxes every year, the IRS claims that Warwick owes millions of dollars in unpaid taxes. According to Warwick's attorney, a lot of this debt is because of her past business manager who mismanaged the singer's affairs, leaving her finances in shambles.

In Warwick's petition to the court, she points out the serious discrepancy between her income and her debt. Currently, her income is listed at just under $21,000 while her debt totals a staggering $11 million. This includes the $7 million the IRS claims she owes and another $3.2 million owed to the state of California in unpaid taxes.

Although many people here in Minnesota don't have this same staggering amount of debt, the frustration with having more in debt than income is a relatable feeling to all. Bankruptcy is never an easy decision, but in situations like this, it's often times necessary in order to free you from a difficult situation and start over on the right foot again.

Source: The Wall Street Journal's Bankruptcy Beat blog, "Do You Know the Way to Bankruptcy Court?" Jacqueline Palank, March 26, 2013

Transferring debt to a credit card may be a worse deal than it sounds

2013-03-26T20:45:40Z

Even though the nation is pressing forward from the recession, many Americans, including those here in Minnesota, are still feeling the stresses of a recession that went on far longer than expected. This has meant trying to save a buck wherever possible in an attempt to lower the debt that was accrued over the past few years.

Taking advantage of people trying to avoid paying through the nose with interest premiums, many credit card companies are now offering debt-balance transfer which allows card holders to transfer other forms of debt such as a car loan to a credit card. But despite the allure of nearly a year free of interest payments, some financial experts warn against giving into the glitz and glam these cards offer.

]]> It's important to point out that despite the enticing introductory zero-percent interest rate most cards offer, the APR can quickly jump into the double digits when this period of time is over, leaving many card holders paying more than they had been with their previous agreement. This can especially turn into a troubling situation for people who are already nearing a financial crisis like bankruptcy.

Although it may seem advantageous to consolidate all of your debt so that you are only paying one creditor, for many people close to bankruptcy, this could mean higher interest rates later on which can actually be counterproductive in the end. And because revolving debt like credit card debt is a higher risk for lenders, failing to pay on time can mean a huge hit to your credit score as well.

As many financial specialists will tell you, looking past the allure of introductory zero-percent APR and thinking about the impact later on could help save you from a serious financial crisis down the road. It might even save you from filing bankruptcy as well.

Source: The New York Times, "The Risks of Transferring a Car Loan to Credit Card," Ann Carrns, March 18, 2013

Aggressive marketing from colleges putting students in considerable debt

2013-03-19T15:00:00Z

For most people across the state of Minnesota, when it came time for graduation from high school, there was likely the considerable pressure to go to one of the top colleges in the nation. But while tuition costs steadily rose over the last few decades, many people wonder now at what point will the cost outweigh the degree?

It's something that the one attorney general has been thinking about for quite some time. For years now he has watched as many big-name schools have used federal funding towards aggressive marketing campaigns in an effort to get more students to come to their schools. But instead of getting an education, many students are simply left with tens of thousands of dollars in debt. Sometimes, students drop out because of the high cost of tuition, never actually reaching the end and getting their degree.

]]> But Attorney General Jack Conway of Kentucky wants to change that. Along with 13 other states, including Minnesota, the attorney general hopes to stop for-profit universities and colleges from using federal money for recruitment. The Protecting Financial Aid for Students and Taxpayers Act will in essence ensure that the money received by colleges and universities through federal assistance programs goes towards serving and educating the students who go to the school. As some studies have shown, many times it doesn't happen this way.

Although it's important to point out that this bill will not prevent a student from taking on a large amount of student-loan debt during the course of their academic career, it could eliminate some of the costs now associated with the cost of tuition. It's a small step, some say, in the direction towards lowering the overwhelming number of people who must endure the crippling weight of student loans every month.

Source: The Lane Report, "Attorney general supports federal bill to curb college recruiting abuses," Mar. 18, 2013

Wayzata Investment Partners agrees to help debtor through Chapter 11

2013-03-12T15:00:00Z

Wayzata Investment Partners, a private investment firm here in Minnesota, has recently agreed to provided $30 million in Debtor-in Possession financing to one Ohio company after it filed for Chapter 11 bankruptcy in late February. With the help of their financial backing, the company-Ormet Corporation-will be able to make the smooth transition of ownership to its new owner, Smelter Acquisition.

The Ormet Corporation, a leading producer of primary aluminum, says that its decision to file for Chapter 11 came after metal prices began to dip while energy costs began to rise. The company explains that this was the perfect storm from which they could not achieve profitability. Instead of leaving their clients and employees with headaches of their own from Chapter 7 bankruptcy, when an offer came forward from Smelter Acquisition, Ormet jumped at the chance to eliminate their debt but stay a company in return.

]]> Unlike Chapter 7 bankruptcy, Chapter 11 allows a company to purge a majority of their debt while continuing to operate as normal. Of course, the company must adhere to a specific set of guidelines in return after being approved by the U.S. Bankruptcy Court. With the DIP financing from Wayzata Investment Partners and an additional $60 million from Wells Fargo, Ormet says that it will have "sufficient liquidity to meet ongoing obligations and ensure that the Company's operations continue without interruption."

Ormet is hopeful that everyone involved with the company, from employees to customers, will not be affected by the bankruptcy process and has even requested that they pay employee wages, salaries and benefits barring Court approval.

Although the process of bankruptcy may seem like a difficult process, with the help of a skilled attorney and a well thought out plan, a company can make sure that the process goes as smoothly as possible for everyone involved.

Source: The Wetzel Chronicle, "Ormet Files Bankruptcy," Lauren Riggs, Feb. 27, 2013

Things to keep in mind to avoid medical debt

2013-03-06T17:00:00Z

If you're like most Minnesotans, then you're already well aware that the cost of health insurance is on the rise. And like most Americans, you too may be struggling to pay those often times harsh premiums that leave your pocket book empty and your health non-the-better.

In most cases, people who can't afford health insurance chose instead to go without it. After all, besides a yearly physical, when was the last time they really needed it? But all it takes is that one trip to the hospital and you're suddenly overwhelmed with medical debt.

]]> And although it most cases, mounting medical bills cannot be avoided, there are a few ways that you can not only prevent this debt from occurring, but can save yourself from possibly having to file for bankruptcy in the future as a result.

The most important thing is that even if you think you don't need coverage, having it as a safety net can make the difference between a couple thousand dollars and taking out a mortgage on your home to pay for medical costs. Also, it's important to know your plan. There are often times hidden costs when going outside of your network or getting treatments that may not be covered under your plan.

When it comes to your medical bills, look them over closely before paying them. Because of clerical errors, you might find that you've been charged for treatments or procedures that you never received. When it comes time to paying your bill, it never hurts to try to negotiate payment options. In cases of financial hardship, some hospitals are willing to reduce the amount that you owe in exchange for a structured payment plan.

And like with all aspects of life, it's always a good idea to have money in savings. Although we'd like to think that the worst can never happen, in most situations this isn't the case and you never want to be blindsided by debt.

Even though some medical debt can't be avoided, using some of these simple preventative tactics could save you from making the difficult decision of filing for bankruptcy in the future.

Source: US News & World Report, "5 Ways to Avoid Medical Debt," Ben Edwards, Feb. 28, 2013

What's the difference between Chapter 7 and Chapter 13 bankruptcy?

2013-03-02T17:11:59Z

Most people in Minnesota think that filing for Chapter 7 bankruptcy is the only way to get out of a financial crisis. That's because many people don't know that there are other types of bankruptcy, such as Chapter 13, that can not only help you get out of debt but won't completely obliterate your credit score in the process.

But what is the difference between Chapter 7 and Chapter 13 bankruptcy and what do people in Minnesota need to know about the two before moving forward in the bankruptcy process?

]]> First of all, the main difference between Chapter 7 and Chapter 13 is how debt is handled. When most people think of bankruptcy, they usually think of it in general terms and assume that it gets rid of all of their debt. But what they're really thinking about is specific to Chapter 7 bankruptcy, and few know that it does not cover all of their debt. Let's take a closer look:

Chapter 7 bankruptcy protection allows debtors to get rid of most of their debt in order to start over with a clean slate. Although the debtor may be cleared of a majority of their debt, they are doing so at the risk of losing properties that they own and receiving a heavily depressed credit score as well. It's important to remember too that not everyone qualifies for Chapter 7. People who apply for this type of bankruptcy protection must prove through financial records that their debt is larger than their assets. If a person fails to demonstrate that they are unable to pay back their creditors, their petition for protection is denied.

Unlike Chapter 7, Chapter 13 allows people to pay back their creditors through a repayment system. Also known as reorganization bankruptcy, the repayment plan works with a person's income to gradually eliminate debt. This type of bankruptcy protection is better suited for people who would like to keep their property and not suffer a depressed credit score too.

As we've said before, there is a lot to think about when it comes to bankruptcy, and without legal aid, one wrong decision could negatively affect your financial situation for life.

Source: FindLaw.com, "Chapter 13 vs. Chapter 7 Bankruptcy"

Number of people in Northwest MN file for Chapter 7 help

2013-02-22T20:19:54Z

Although the economy appears to be recovering from the recession, many people across the state of Minnesota are still trying to fend off the debt they accrued over the past years. For some, it's been simpler than others; such is the case for a number of people in Northwest Minnesota who have filed for Chapter 7 bankruptcy in hopes of starting again with a clean slate.

The bankruptcy filings were made across 12 counties and included six people. Most of the filings appear to be a single person trying to expunge their mounting debt, while in other cases it was married couples.

]]> Although the upside to filing Chapter 7 bankruptcy is that a person can get rid of all or most of their debt by liquidating their assets, the downside is an severely impacted credit score.

Chapter 7 bankruptcy also requires a lot of paperwork and documents to be collected and entered in the electronic court filing system by your attorney in order to file and complete a case. In a chapter 7 Debtors must show that their debt considerably outweighs their assets as well as a detailed account of their income and expenditures. Other information includes a list of all creditors and the amount of money owed to these institutions, and a list of the debtor's properties. As for expenditures, a person is required to submit a detailed list of all monthly living expenses as well.

Aside from the enormous amount of work needed to gather all of the necessary financial records, a person should deeply consider the aftermath of filing. It's important to point out that besides a deeply depressed credit score for a number of years, not all debt can be expunged including most student loans, debts to creditors not listed at the time of filing, recent taxes, child support and spousal maintenance payments, and many more.

Hopefully the people from Northwestern Minnesota that we mentioned above have excellent legal assistance during this process because without it, they may become overwhelmed with the enormous task ahead of them.

Source: The Park Rapids Enterprise, "Minnesota Bankruptcies (February 09, 2013)," Feb. 9, 2013

Although a bankruptcy filing impacts a persons credit score, it is often the case that by the time a person considers bankruptcy to relieve themseves of their debt, their credit score has already been impacted because of the amount of debt and late payments creditors have reported. Thus, a bankruptcy may not actaully have a great impact on a credit score or report.

Dropping number of bankruptcy filings show economy on the rise

2013-02-15T21:49:02Z

According to many financial experts across the nation, January was the month to be excited about as agencies like Epiq Systems Inc and the American Bankruptcy Institute announced that the number of bankruptcy filings went down significantly.

After crunching the numbers from 2012 and taking a look at look at the entire month of January, experts say that the number of filings for Chapter 11 bankruptcy protection was down 36 percent from the same time last year. But it's not just Chapter 11 bankruptcy filings that are dropping; Chapter 7 filings also saw a 26 percent drop.

]]> If you take the total number of bankruptcy filings from all types, experts say, we are down 11 percent overall, leading many to wonder what this means for businesses in the future.

According to many economists, the decrease in the number of companies filing for bankruptcy is a good indication that the economy is still continuing to rebound. As the unemployment rate falls, consumer confidence, as well as consumer spending, continues to rise which puts more funds into the pockets of businesses that would have otherwise struggled to make ends meet.

Despite the positive direction the market seems to be heading, many businesses simply could not hold on any longer in January and unfortunately had to "turn in their keys" so to speak. It's important for businesses to remember that even though the environment around them may seem to be improving, one specific businesses situation may take more time to resolve than they actually have time for. In situations like this, companies need to be reassured that they can seek help from bankruptcy experts who can make a difficult process seem easier.

Source: Thomson Reuters News & Insight, "U.S. commercial Chapter 11 bankruptcies fall 36 pct in January," Tom Hals, Feb. 5, 2013