Credit reporting data following a bankruptcy

If residents of New York file for bankruptcy, they no longer have to worry that credit reporting services will not update their credit report data to reflect the discharged debts. As recently as 2005, three of the top credit reporting services would still list debts that had been eliminated after someone filed for Chapter 7 bankruptcy. This means that an individual’s credit report could show multiple delinquent accounts that had been eliminated after their filing went through. Even worse, it was not uncommon for people to contact these credit reporting agencies and have no changes made to their credit reports. By 2008, thanks to legal action, reporting agencies had already begun making changes to the way they handled reporting debts after an individual had filed for bankruptcy. People may wonder if there is any real reason to ensure that discharged debts are removed from their credit report following a bankruptcy because a bankruptcy is a black mark against their credit. It is very important because individuals can begin rebuilding their credit almost immediately following filing for bankruptcy. Within two years of filing, individuals can make great improvements on their credit rating, and leaving discharged debts on their report will only… Continue reading

New York software developer files for Chapter 11

Kit Digital Inc., a New York-based company that develops software used to manage digital video, has filed for bankruptcy after reaching a negotiated restructuring agreement with a shareholder group. TheChapter 11 petition was filed in late April in the U.S. Bankruptcy Court for the Southern District of New York. The petition lists assets in excess of $10 million and debts of a similar amount. The company had announced earlier in April its intent to file for bankruptcy with a debt repayment plan that has been approved by three of its largest shareholders. The plan has not yet been posted on the court’s docket. Kit Digital’s most recent financial statements show that the company made $107.3 million in revenue for the six month period ending June 30, 2012. During the same period, losses from operations totaled $110.8 million, including a charge for goodwill impairment in the amount of $55 million. The company’s largest unsecured creditor is the Jones Day law firm, which has a claim of $1.6 million for legal fees and services. Kit Digital’s situation illustrates how a business that cannot operate profitably due to operating losses and debt may find relief through a Chapter 11 business bankruptcy. After filing… Continue reading

Lesson on Chapter 13 bankruptcy

Bankruptcy is handled in the federal court system, in New York and elsewhere. However, there are variations from state to state involving exemptions and income requirements needed to qualify for the two most common chapters of bankruptcy used by individuals. Chapter 7 is filed in approximately 70 percent of bankruptcy cases. A Chapter 7 filing will generally eliminate most unsecured debt. However, it may also require selling most assets including homes and cars. The most common option for those who wish to keep their primary residence and car is to file Chapter 13. This may be of interest to New York readers since bankruptcies are still at high levels all over the country. Chapter 13 is a long-term plan that allows individuals to pay back a portion of their debt with the oversight of a bankruptcy trustee. The plan usually lasts from three to five years and, the amount paid back is based on the household income. The trustee collects the monthly payment and distributes the funds to the creditors. People in Chapter 13 can generally keep their home and vehicle as long as they can demonstrate there is enough income to cover the payments. The first step in filing… Continue reading

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