Bankruptcy filings: Nifong, wife bring home $9,210 a month

Triangle Business Journal

Former Durham District Attorney Michael Nifong and his wife are making just enough money in retirement to cover monthly expenses, according to bankruptcy filings.

Documents show that Nifong and his wife, Cy Gurney, bring in about $9,210 every month between Nifong's $4,957 monthly pension and Gurney's job.

The couple's average monthly expenses total $9,285, documents state. Monthly payments on the Nifong home's two mortgages total $1,787, while payments on a mountain home, in Gurney's name only, total $1,636.

Other expenses are also typical: utilities, transportation, credit card bills, taxes and savings for Nifong's son's college expenses, among others.

The water and sewer bill at Nifong's home is about $140 a month.

Nifong filed for bankruptcy protection Jan. 15, listing liabilities of $180.3 million and assets of $243,898 - including a home valued at $230,000 and a 2003 Honda Accord EX valued at $8,398.

The primary creditors listed in the bankruptcy documents are the six former Duke University lacrosse players who are suing Nifong. Three were charged with the sexual assault of an escort service dancer but were later cleared of all charges by state Attorney General Roy Cooper; another three were not charged with any crime but are suing Nifong, the city of Durham and Duke, charging negligence and fraud in the way the lacrosse case was handled.

Tahera gets bankruptcy protection

By ROMINA MAURINO, CP

TORONTO -- Tahera Diamond Corp. appears to have lost its battle to survive, announcing yesterday it had been granted bankruptcy-court protection after a failure to raise money for its Jericho mine in Nunavut.

The Toronto-based miner, which has faced operating problems and mounting costs at Jericho, as well as financing troubles, had been trying to raise cash so it could take supplies to the mine via its winter road. Tahera has been trying to further develop the mine, which has had mill processing difficulties since it opened more than a year ago.

Yesterday, the miner said its cash flows and cash on hand wouldn't allow it to meet its current obligations and those related to the winter road resupply in Nunavut.

"As we had published before Christmas, we were attempting to do this equity financing and we required a minimum to deal with our financial situation and the re-supply requirements," CEO Peter Gillin said.

Delphi moves toward bankruptcy exit

Dayton Business Journal

Auto parts supplier Delphi Corp. has cleared the first of two vital hurdles for emerging from Chapter 11 bankruptcy protection.

The parent of Delphi Thermal Systems said on Jan. 17 that 81 percent of 4,000 eligible creditors have approved its reorganization plan.

The Troy, Mich.-based company is seeking a federal judge's approval of the plan in a two-day hearing, Jan. 17-18, in New York City.

The company said in a bankruptcy court filing that it expects to have a $6.1 billion exit loan in place by early February, news services reported.

Delphi (OTCBB: DPHIQ) filed for Chapter 11 bankruptcy in October 2005.

The company has about 5,000 permanent and temporary workers at five plants in Montgomery County.

E-mail dayton@bizjournals.com. Call (937) 528-4400.

Obama vows to change bankruptcy laws

www.chinaview.cn

LOS ANGELES, Jan. 17 (Xinhua) -- Democratic presidential candidate Senator Barack Obama, on a campaign tour of Southern California, has vowed to change bankruptcy laws and cap interest rates, it was reported Thursday.

During what his campaign dubbed a "Roundtable on Economic Opportunity" in Los Angeles, Obama, a Democrat from Illinois, called for creating an exemption in the 2005 bankruptcy bill for people who can persuade a bankruptcy court that they filed for bankruptcy because of debts incurred through medical expenses, according to the Los Angeles Times.

Obama's proposal also includes extending the 36 percent limit on payday loans to members of the military to all Americans; encouraging banks, credit unions and Community Development Financial Institutions to provide affordable short-term and small dollar loans; establishing a credit card bill of rights and significantly increasing emergency pre-foreclosure counseling resources, the paper said.

California has the highest number of foreclosures in the nation, and the economic impact on this state is expected to over 23 billion dollars," said Obama, who kicked off the California tour Wednesday.

Obama blamed the federal government for not regulating lenders.

"It's an example of how when the federal government falls down on the job and is listening more to the special interests than it is to ordinary working families that we end up getting into these kinds of crises," he was quoted as saying.

Obama has proposed creating a 10 billion-dollar fund to help prevent foreclosures, eliminate some taxes and fees for families who must sell, and offer counseling to homeowners.

He also proposed changes in the consumer credit card industry. "People are getting caught in a credit card system that is unfair," he said, faulting "teaser rates" that skyrocket, interest charged on late fees and hidden fees.

Bankruptcy fears deepen at lender

Countrywide discloses rising delinquencies and foreclosures. Its stock falls to $5.12 as investors continue to flee.

By E. Scott Reckard, Victoria Kim and Tom Petruno, Los Angeles Times Staff Writers

Countrywide Financial Corp.'s future was called into question again Wednesday after it reported another rise in loan delinquencies and foreclosures, fueling fresh speculation that the company was headed toward bankruptcy.

The nation's biggest mortgage lender was "withering" and "might falter if it does not receive an infusion of at least $4 billion within the next couple of weeks," said Egan-Jones Ratings Co., an advisor to pension funds and other big investors.
Weiss Research, which rates the condition of lenders, said the Calabasas company "is on a collision course with bankruptcy," adding that it "exhausted many of its extraordinary financing options last year and is ill-prepared for the rising mortgage defaults and home foreclosures that are widely expected this year."

Countrywide did not respond to a request for comment. As bankruptcy rumors swept the financial markets Tuesday, it issued a general denial that it was near collapse.

Yet the stock fell as low as $4.43 on Wednesday, before rebounding to close down 35 cents at $5.12, an 11-year low. The shares had lost 28% on Tuesday.

Weiss said Countrywide borrowers had little to fear if the company should fail, noting that its loan servicing business was valuable and would continue on even in bankruptcy. But it said anyone negotiating a new loan should be cautious because "that process could easily be disrupted."

Speculation about Countrywide's future echoes concerns first raised last summer, when funding dried up from the Wall Street firms that had provided money for the company to make loans. Those same firms also had been big buyers of Countrywide's mortgages as fodder for debt securities sold to investors.

Traders work on the floor of the New York Stock Exchange. The latest sell-off in Countrywide and other financial stocks helped drag the stock market sharply lower. The Dow Jones industrial average sank 238.42 points, or 1.9%, to 12,589.07, its lowest close since April.

Countrywide squeaked through that crisis by drawing down a huge emergency bank credit line, getting a $2-billion investment from Bank of America Corp. and accelerating a plan to beef up deposits at its Countrywide Bank subsidiary, enabling it to fund all its own loans.

That tactic has generated results. The bank's retail deposits increased $7.7 billion in the fourth quarter to $33 billion. But it has been achieved at high cost.

Countrywide is offering a 5.45% annualized yield on three-month, $10,000 certificates of deposit, the highest in the U.S. and far above the national average yield of 3%, according to Informa Research Services.

On Wednesday, some customers at Countrywide Bank's Glendale branch said they were concerned and closely following the news, trying to determine whether the favorable terms offered were worth the risk.

Fred Campi of Silver Lake decided it wasn't. He was at the bank to withdraw four certificates of deposit, cashing out a total of $60,000.

Countrywide's individual accounts are federally insured for up to $100,000. But Campi, an administrative aide at Los Angeles City College, said he didn't want to risk losing access to his funds, even temporarily.

"I don't know if it's worth the crapshoot," Campi said. "If six months from now they're back on their feet, I'll be back."

Another customer, retired lawyer Rico Fabian, said he was sticking by the lender for now. But he asked the bank's associates detailed questions about whether his money would be safe as he made a deposit.

"I'm watching the news carefully. If I find a better investment option, I'll move my money, but they're offering good fixed annuities," the 75-year-old Los Angeles man said.

Pierre Habis, head of retail deposits at Countrywide Bank, said it had continued to attract new deposits this week despite the latest bankruptcy rumors.

The cash inflows have so greatly exceeded expectations, he said, that the bank planned to begin trimming its CD rates in the next week.

If Countrywide lowers CD rates, that could help damp concerns that the company is facing a funding crisis.

Countrywide's stock slump on Wednesday, meanwhile, appeared to be triggered by the release of its December lending summary.
Countrywide said the delinquency rate for the $1.5 trillion in mortgages it services had risen to 7.2% at the end of 2007, up from 4.6% a year earlier and 6.5% at the end of November.

The number of loans in foreclosure more than doubled from a year earlier, to 1.44% of 9 million loans the company services.

Like many mortgage lenders, Countrywide has been hit hard by defaults on high-risk loans made to people with weak credit. The company said in a statement that it was making progress in its efforts to focus on traditional loans and noted that its new loans were slightly higher in December than in November, ahead of its own forecasts.

Analyst Frederick Cannon said Countrywide's latest lending report contained an ominous sign -- that the average size of foreclosed loans was on the rise as well.

That shows that the credit decay was spreading from sub-prime customers to borrowers with good credit scores and that dud loans in high-priced housing markets -- especially California -- were taking a heavier toll on Countrywide, said Cannon, of banking industry specialist Keefe, Bruyette & Woods.

Yet on Wall Street, many analysts who follow the company continue to expect it to turn a substantial profit this year. The mean 2008 earnings estimate of 14 analysts surveyed by Thomson Financial is $1.66 a share.

Most of those same analysts, however, were blindsided by the mortgage debacle. As recently as mid-August, they expected Countrywide to earn $2.80 a share in 2007. Now the mean estimate is for a loss of 76 cents a share for 2007.

"The question from here is whether we will see some moderation in the growth of delinquencies and foreclosures in the next couple of months," said Robert Napoli, an analyst with Piper Jaffray & Co. "If we do, the market for their stock may stabilize somewhat."

Federal regulators, meanwhile, are closely monitoring the status of Countrywide and other large thrifts, said William Ruberry, spokesman for the Office of Thrift Supervision.

scott.reckard@latimes.com

The Candidates Discover the Economy

www.nytimes.com

The presidential candidates are only beginning to recognize what many voters have already figured out through painful, personal experience: the economy is in trouble and unlikely to improve without some sensible government response.

The Republicans have been particularly slow to grasp the depth of the problem and the anxiety and pessimism Americans are feeling. Campaigning over the weekend in Michigan — one of the hardest-pressed states and also the site of a G.O.P.-only primary this week — they doled out sympathy, but called mainly for their party’s all-purpose fix: more tax cuts.

Sympathy is apt for a state with the nation’s highest unemployment rate, and a targeted and short-term tax rebate may well be necessary. But as stimulus measures go, tax cuts are not nearly as effective as bolstered federal spending on unemployment compensation, food stamps and direct financial aid to states. None of the Republican candidates have yet to think that creatively. And they have barely mentioned the foreclosure crisis at the root of many of today’s economic problems.

The Democratic front-runners have been slow off the mark, but they’re catching on. Last week, Hillary Clinton called for a robust short-term stimulus package, including more federal spending for jobless benefits, home heating aid and grants to states to help prevent foreclosures. John Edwards has been pushing a similar plan for weeks. Barack Obama announced a rescue plan Sunday that relies more heavily on targeted tax cuts to get the economy moving, and less on direct spending.

The proposals from Mrs. Clinton and Mr. Edwards are closer to what’s needed and the type of stimulus that Congressional leaders and the White House should begin to discuss as soon as President Bush returns from his Middle East trip. Even such welcome steps would need to be designed and managed carefully to ensure that they don’t permanently add to the deficit. Spending to manage a crisis need not be paid for immediately. Lawmakers and all of the candidates will still need to explain how stimulus measures would be paid for later on, when the economy has recovered.

There is already pending legislation that could help blunt some of the pain. The House has passed an excellent bill to modernize the nation’s unemployment compensation system — expanding the number and types of workers who qualify — but the Senate has yet to move. Congress should also pass a measure that would allow bankrupt homeowners to modify their mortgages under bankruptcy court protection. That would help more homeowners keep the roof over their heads, as well as be an incentive to lenders to work more diligently to modify loans before they wind up in bankruptcy court.

The candidates — especially those who still have day jobs on Capitol Hill — should press for swift approval of those two important measures, and be ready to press the case for a targeted and temporary stimulus package if conditions worsen. The voters are watching and waiting.

Countrywide Draws Ire of Judges

Questions About Practices
Arise in Bankruptcy Cases;
Possible Liabilities for BofA

By AMIR EFRATI and KARA SCANNELL
January 14, 2008; Page A3

More federal bankruptcy judges are calling into question the business practices of Countrywide Financial Corp., as Bank of America Corp. prepares to buy the ailing mortgage lender.

According to court documents in a bankruptcy case in Houston, Countrywide didn't properly credit a borrower's payments made during bankruptcy but instead applied them to prebankruptcy debt, which isn't allowed. In the same case, involving a debtor named William Allen Parsley, Countrywide represented to the court that Mr. Parsley owed fees that turned out to be unsubstantiated and in error. These included an improper $450 fee and a $65 unsubstantiated fee.

• The News: More federal bankruptcy judges are questioning the business practices of Countrywide Financial.
• The Details: In one case, Countrywide didn't properly credit a borrower's payments made during bankruptcy, instead applying them improperly to prebankruptcy debt.
• The Upshot: Such problems could create headaches for Bank of America, if it closes its planned purchase of Countrywide.

During a hearing last month, U.S. Bankruptcy Judge Jeff Bohm chastised Countrywide and its lawyers after the company admitted making numerous errors in the case. "How many times do I have to listen to that before I conclude, 'You know, there's got to be some kind of reckoning' when I keep hearing time after time, 'we made a mistake, we made a mistake, we made a mistake, we made a mistake?'" Judge Bohm said. He is considering sanctions against the company.

Countrywide says it has incurred at least $400,000 in costs associated with the case after having its employees deposed by the U.S. Trustee Program, a division of the Justice Department that oversees the bankruptcy system. The agency has been investigating the company's handling of loan payments and court claims in cases across the country.

In Miami, Bankruptcy Judge A. Jay Cristol last month approved a U.S. trustee's requests to subpoena and depose Countrywide to obtain information about how it made mistakes in a case. Initially, the company claimed in court that the borrower would need to pay $4,800 a month for a mortgage during bankruptcy. But after the borrower objected, Countrywide said it had erred and reduced its claim to about $2,400 a month. In a hearing in December, Judge Cristol said Countrywide had been found "with its hand in the cookie jar."

Countrywide has said it was investigating what happened in the case.

Bankruptcy litigation is among a list of potential legal liabilities Bank of America may inherit from the company if the planned acquisition, announced last week, is completed. These include inquiries from the Securities and Exchange Commission and several state attorneys general, as well as shareholder lawsuits tied to Countrywide's financial decline and other class-action and individual suits brought by borrowers for alleged abuses by the company. In some cases Countrywide has denied allegations and in some it hasn't yet answered allegations; in others it has said it is cooperating with authorities.

Last week, Bank of America's chief executive, Kenneth D. Lewis, said his company had taken into consideration lawsuits and "the negative publicity that Countrywide had" in concluding that ultimately the purchase would be a good deal for shareholders. A Bank of America spokesman said yesterday the company "evaluated current and potential claims against Countrywide and that's reflected in the purchase price we agreed to pay."

A Countrywide spokesman didn't respond yesterday to requests for comment.

Katherine Porter, a bankruptcy-law professor at the University of Iowa who published an influential study on problems with claims made by mortgage companies in the bankruptcy system, said yesterday that Bank of America "needs to help Countrywide rebuild its technology" to overcome its "structural shortcomings," especially "now that judges are starting to lose confidence" in filings made by mortgage companies.

In the SEC inquiry, one area under scrutiny is whether the mortgage lender set aside the appropriate amount of reserves to cover potential losses from loans still held on the company's books, known as loan-loss reserves.

Among the areas of interest to the SEC is whether Countrywide adequately increased its loan-loss reserves to reflect slowing or delayed payments from homeowners or if the mortgage lender failed to increase the reserve to purposefully forestall taking a charge to its financial statements. The SEC is also investigating stock sales made by Countrywide founder Angelo Mozilo made through prearranged sales plans.

Countrywide on Friday said its policy is to fully cooperate with inquiries from regulators, and that "we believe we have fully complied with all rules and regulations."

Write to Amir Efrati at amir.efrati@wsj.com and Kara Scannell at kara.scannell@wsj.com

The Effects Of Overpowering Credit Card Bills Can Spill Over Into All Parts Of Life

Investopedia Staff, Investopedia.com

The effects of overpowering credit card bills can spill over into all parts of life, affecting your job, your family life and even your health. In fact, if you have large credit card debts, you may feel completely overwhelmed already and circumstances may appear hopeless.

Don't despair, there are many options available to help people free themselves of debt. If you're in over your head, read on for some tips to help you stop sinking and start swimming.

* Put an End to Everyday Debt
* Expert Tips For Cutting Credit Card Debt

Get a grip

The out-of-control mall shopper is a caricature of the imprudent credit card user. But you don't have to be reckless to amass large credit card debts. Perhaps you tapped financial resources to advance your education, or your job was unexpectedly outsourced. Maybe a long-term illness touched you or your partner, or you started a business that never quite caught on.

When individuals use credit cards, they generally think it will be a short-term safe passage. Unfortunately, life has a way of taking twists and turns, which is often how credit card debt becomes a longer-term trap.

Credit card users, therefore, must remain alert and vigilant about their spending; even very small balances can quickly and unexpectedly balloon out of control.

* Investing In Emerging Market Debt
* Exotic Options: A Getaway From Ordinary Trading

In March of 2007, the US Senate looked into the practices of credit card companies, including the perceived lack of disclosure, universal default practices (in which a consumer can be severely penalized by one credit card account for being late on a separate account), and the interest charged on the entire credit card balance, even when customers have made timely payments.

In response to the Congressional inquiry, large credit card companies voluntarily changed some practices. Despite this, now more than ever, it's "borrower beware" when it comes to credit card use.

Get the lay of the land

If credit card balances and their corresponding payments have made your financial life unsustainable, you might consider taking some of these steps:

First steps:

Prepare yourself: Taking back the control over your financial life involves educating yourself about personal finance and taking a hard, honest look at the decisions you made to get yourself into your current situation.

Discipline, focus and personal stamina will be required for any debt relief effort. There are no quick and painless fixes.

Ask for help: Hire an independent financial advisor, such as a Certified Financial Planner, who can look at your particular situation, help you to develop a plan and select a specialist.

The kind of credit card debt management specialist that will be right for your situation will depend on many factors, including the amounts owed, the interest rates involved, the assets you possess and the particular creditors involved. Credit card use can be dangerous but the path to debt relief is also fraught with peril. As such, it's worthwhile to have an independent advisor at your side.

In addition to calling in professional help, you might also consider confiding in close friends or family members about your situation to assess all of your possible resources. Help can come in many forms, and who better to talk to then those that care for you?

If you can replace high interest debt with a personal loan, you may be able to get out of debt more quickly. You may need to swallow your pride to admit your situation, but a much lower interest rate can give you some badly needed breathing room.

Some available options:

Consolidate the debts: Debt consolidation involves taking out a loan to combine all of your credit card debts and personal loans into one single loan (with one payment). This is generally done to simplify your debt situation and to lower the overall interest rate you are paying.

Debt consolidation companies generally present themselves as nonprofit organizations but this should not lull you into believing they are working for you. Like all participants in the financial community, they are intent on making money from the situation.

It's best to explore the details of debt consolidation only in conjunction with the help of an independent financial advisor. There are many risks involved with loan consolidation (such as the decision to move from unsecured debt to a debt that is secured with collateral). You will want to make sure you're moving into a situation that puts you into less financial risk, rather than more.

Settle the debts: Debt settlement may be an option if you have large credit card debts and can demonstrable a hardship situation of some kind, such as income volatility. In the case of debt settlement, you will hire a debt settlement company to negotiate on your behalf with the credit card companies you owe.

It is generally not advised that you call your credit card companies to try to settle debts yourself, as it may make the situation worse. In most cases, a competent debt settlement company can reduce the amount of the debt you owe by 25-50 per cent.

The debt settlement company takes a fee for its services, usually a percentage of the total outstanding debt. The debt settlement alternative is one to consider if you are missing credit card payments and are on the way to complete default.

Debt settlement appears on your credit report as a collections or settlement and as such, adversely impacts your credit rating for the period of the time you are accumulating the agreed upon settlement amount to the credit card company, plus six months. In practical terms, this means a black mark on your credit report for three to five years (or even more).

It is advisable to first seek a personal financial planner to help you examine whether this option makes sense for you and to help you select the best debt settlement company for your unique credit card debts.

Bankruptcy: No one likes to think about declaring bankruptcy, but the truth is bankruptcy is a legal financial tool that adults can use to gain a fresh start. In some cases, bankruptcy is the only way to get financial resources productive again.

Bankruptcy can legally appear on your credit report for up to 10 years but its effects on your overall credit score depends on many factors, including how you go about rebuilding your credit history as soon as your bankruptcy case is closed.

Changes made to bankruptcy laws in 2005 made it more difficult for individuals to declare bankruptcy, although rules vary by state. If you are seriously considering this option, see an independent financial planner before you consult a bankruptcy attorney for advice.

Conclusion

Eliminating overwhelming credit card debt can be difficult and complex. The first step is to educate yourself, ask for help and seek advice from an independent financial planner who can look at your unique situation and help you to navigate the array of debt relief choices that exist.

Debt consolidation, debt settlement and bankruptcy are a few possibilities that are available to you. Taking responsibility for your own financial education, planning and financial decisions will help you to gain the strength to help you to avoid a difficult debt situation in the future.

Bankruptcy for £100 to help poorest

www.theherald.co.uk

Scotland's poorest and most vulnerable debtors were yesterday offered their cheapest escape from creditors.

The Scottish Government said it would allow so-called "Ninas" - people with no income and no assets - to declare themselves bankrupt for a fee of just £100.

The move is designed to rescue those who have no way out of debt but whose creditors have declined to take court action against them, and comes after a campaign by money advice charities.

Fergus Ewing, the Community Safety Minister, said: "There are people across Scotland who simply see no way out of the debt they are in. When people are earning under £220 a week and the bills and demands keep coming through the letterbox, they need a realistic low-cost way out.

"This government has listened to the views of Citizens Advice Scotland and Money Advice Scotland who say that over 1000 people across Scotland with low income and assets desperately need a new way to find relief from debt.

"That's why I will shortly be laying regulations that provide a new low-cost, government-run scheme to provide that. The low income, low asset scheme will provide a new route into bankruptcy for the minimum possible cost to the worst off in our society.

"I hope this scheme can provide relief for those who need it most and provide a last resort way out of the spiral of debt for those who can't afford it and simply have no option other than bankruptcy."

The government will introduce new regulations under last year's Bankruptcy and Diligence Act 2007 to allow the Accountant in Bankruptcy to provide the £100 service.

The announcement comes as debt charities warned of a mountain of credit card bills to hit Christmas shoppers this month. Nearly nine million people in the UK used credit to buy their presents and food this holiday season.

The people targeted in the initiative, are far from the home-owning, middle-classes who account for the vast majority of credit. But the impact of even the smallest loans or debts can be huge - especially as interest rates for Ninas are far higher than for most borrowers.

Yvonne Gallacher, chief executive of Money Advice Scotland, said: "We are pleased that government has listened to the advice sector, who have a wealth of experience in dealing with individuals in society who presently cannot access a bankruptcy route, due their status."

Kaliani Lyle, chief executive officer of Citizens Advice Scotland, said: "We have long argued for the need for more effective debt relief for those on the lowest incomes. We very much welcome this new scheme, which helps address this issue and provides hope for those trapped in unserviceable debt."

The new "cheapie" bankruptcy will be available only to people who earn less than £220 a week, the equivalent of 40 hours on the minimum wage, and have less than £1000 in assets.

Of benefit to

The calls are making him ill. Mr A, 61, owes £16,000, has been in debt for three years, and the debt collectors are after him. Nobody will take him to court, so he cannot make himself bankrupt under current Scottish laws. Things went wrong for Mr A some time ago. Disabled for 10 years, he set up himself up as a bookie. His health suffered, so he shut his business down. His creditors do not want to know his problems. Mr and Mrs B knows how Mr A feels. The 45-year-olds owe nearly £25,000 but have no way to pay it back. Mr B works full-time but earns just £220 a week. Mrs B looks after her four children, one of whom is severely disabled. They have no assets. They have carried the debt for three years but, like Mr A, cannot petition for bankruptcy because their creditors have not taken them to court.