LodgeNet files for bankruptcy protection in New York

A company that provides on-demand movies and Internet service to hotels and hospitals has filed for bankruptcy protection in New York. LodgeNet Interactive Corp. said the Chapter 11filing is part of a plan to reorganize the company’s debts and be acquired by Colony Capital, an investment firm. The restructuring is expected to be completed within the next 60 days. LodgeNet first announced its plans to sell itself to Colony Capital in late December. In exchange for the sale, Colony will provide $60 million in capital to the financially troubled company. LodgeNet also has secured commitments from creditors for $15 million in debt financing. The injection of new capital and financing will allow the company to continue operations and proceed with plans to partner with DirecTV, which provides pay-television services. When a business is unable to operate profitably due to overwhelming debt, a Chapter 11 bankruptcy may be an option. After filing for Chapter 11 bankruptcy, the company can continue its operations while it works out a plan with the bankruptcy court to reorganize its debts and pay creditors. As part of its debt reorganization, a company may seek out a buyer to inject new capital into the company, which can… Continue reading

Loan modification in Chapter 13 bankruptcy

New Yorkers who are having difficulty making their monthly mortgage payments may wonder if a bankruptcy court can order a lender to modify a mortgage loan. The answer is no. While lenders cannot be forced into a loan modification,Chapter 13 bankruptcy offers a way to open the negotiations. In many cases, the parties agree to a mortgage loan modification as an outcome of a Chapter 13 proceeding. A loan modification is a tool that helps homeowners cure mortgage defaults. It involves altering the terms of the loan to create a payment plan that the homeowner can afford. A loan modification may include a lower interest rate on the loan, an extended term or adding any amounts in arrears back into the loan to increase the loan balance. By reaching agreement on a loan modification, a homeowner may be able to stop a pending foreclosure action. During the height of the housing crisis, members of the legal community lobbied for legislation that would give bankruptcy judges the authority to order loan modifications in bankruptcy proceedings. Those efforts were unsuccessful. As a result, the loan modification process requires tedious negotiations and much paperwork. With persistence, it can be accomplished. A mortgage loan… Continue reading

College grads facing overwhelming debt

Easy access to credit cards and sometimes compulsive spending among college-age students in New York and elsewhere have combined to create a growing problem of debt among Americans in their 20s. It is estimated that 50 percent of all college students in the United States have at least four credit cards. With credit so readily available, some students may rack up huge debt without fully understanding the consequences of their actions. For some young adults, the excessive debt has led to Chapter 7 bankruptcy. One recent college student recently shared her story. The 23-year-old described how she obtained her first credit card as a college freshman. By the time she left college four years later, she had three more credit cards and debt in excess of $20,000. Filing for bankruptcy provided a way to make a fresh financial start, however. She is now a freelance writer who has lived in New York and says she has learned a lesson from her early financial challenges. As the young woman’s story illustrates, there is life after bankruptcy. While personal bankruptcy is not something that one should enter into lightly, filing for bankruptcy may offer a viable solution for those struggling with debt…. Continue reading

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