There are ten common questions about bankruptcy that are normally asked. According to USAlaw.com they are, “ (1) What kinds of bankruptcies are there? (2) What is best for me? (3) Do I get to keep any of my property? (4) What about property that was put up for collateral for a loan? (5) What about credits cards? (6) Is bankruptcy a long procedure? (7) What is the procedure like? (8) How long does it stay on my records? (9) If I a married, does my spouse have to go bankrupt also? (10) Can I go run my credit cards and then go bankrupt?”. According to usalaw.com some of the answers to the questions would be, (2) Your attorney should be able to help you with that question. IN short, if after taking into account your monthly budget, including all your reasonable bills, if you still have money left over to make a contribution towards your debt, then a Chapter 13 might be best. If you do not have any excess income after paying your monthly minimum expense, then a Chapter 7 might be your only option, (6) It will take approximately three months from the time the petition is filed until the date of final discharge for a Chapter 7, (7) A detailed petition listing all of your property, debts and other financial information is filed with the Court. A short period later there will be a meeting with the bankruptcy trustee that you must attend. This is usually the only appearance required. Unless there are problems or one of your creditors objects, the discharge will be granted a few months later, (8) Generally, credit agencies can report bankruptcies for a period of ten years. But a bankruptcy is a court document, open to the public. It will always be there for someone who is really interested in looking”. These questions and answers are some of the most commonly asked by a person that is considering going into bankruptcy so they can get out of debt.
Bankruptcy can seriously affect and individual that is experiencing it but it can have a profound affect on a society. This brings to light the company WorldCom and their bankruptcy that was filed as one of the largest in history. Today WorldCom is now fighting for survival on a day-to-day basis in order to maintain in our demanding market. Bryon Meeks states, “ Though a bankruptcy court Monday provided some financial breathing room for the company, approving a $2 billion loan package while keeping braying debtors from breaking down the doors just yet, that move is cold comfort for the thousands of Internet Service Providers and their customer that depend on WorldCom’s global Internet architecture”. This statement shows how bankruptcy can have a domino affect and not only affect one party but also any other parties involved.
WorldCom officials have tried to calm the fears of any service disruption by stating, “That bankruptcy allows the company to operate more or less normally, except for considerable scrutiny of any asset divestiture, acquisitions or other transactions that are not in the normal course of business”. This statement offers a sense of stability to their customers so that they wont lose any more customers later on down the line.
Dozens of Internet and telecommunications companies have went under but some like Global Crossing keep operating their networks without interruption. Michael St. John’s states, “ I think there will be some disruption but it will be pretty localized as companies decide what they want to do in light of the bankruptcy”. St. John also states, “ At least for the next three months or so you’ll have companies deciding they don’t want to worry about WorldCom and moving off their system” “ If WorldCom actually goes out of business the disruptions will be a bit more major”. Essentially St. John is stating that the bankruptcy with WorldCom is not going to have such an adverse affect on the customers but if they go out of business then there will be a major problem. And in the event that something does happen with WorldCom’s network very few large companies would be affected if that does take place. Meeks states, “ Most companies have contingency plans, in the form of redundant connectivity contracts, in case their primary network goes down. That sort of back up is crucial in the online world. Whereas a service interruption might spoil a fantasy football league’s latest scoring update that same type of interruption could mean millions in lost revenue for a highly trafficked E-commerce site”. These statements show that most companies have a back plan when things go bad so that in the end they don’t lose everything in the process.
While WorldCom is facing its ordeal the network is still able to run despite there current conditions. Gene Kimmelman, co-director of Consumers Union’s Washington office states, “ As an immediate matter, this bankruptcy should create no difficulties in maintaining dial-tone phone service for MCI WorldCom customers for the foreseeable future. If this drags on for a long time, with enormous disputes about how to divide the assets or who gets to buy them up, that’s when there is a greater danger of quality of service and losing the competitive zeal that was there”. As Gene clearly put it WorldCom will be able to maintain while WorldCom clears up their legal matters up in court.
WorldCom’s recent developments are being watched by government regulators due to the telecommunications services they provide to them. Some of the different agencies WorldCom services are the Pentagon, the Securities, Commerce to NASA and the Exchange Commission. According to the General Services Administration WorldCom earned nearly $463 million for those contracts they have with those different agencies. Michael Powell, Federal Communications Commission Chairman states, “While I am deeply concerned by this development, I want to assure the public that we do not believe this bankruptcy filing will lead to an immediate disruption of service to consumers or threaten the operation of WorldCom’s Internet backbone facilities”. This demonstrates again the lengths WorldCom will go in order to ensure that there customer base does not diminish while they are dealing with legal matters.
To add the FCC rules state that a customer must be given at least 30 days before their old service is disconnected or terminated. Despite the FCC rules Northpoint Communications could not prevent their business from being shut down before their customers had a chance to relocate to find another service. But in on a positive note Meeks states, “ Meanwhile, Global Crossing, which filed for the fourth-largest bankruptcy in U.S. history in January, continues to operate a high-speed network that connects more than 200 cities in 27 countries while it considers selling some of its assets or tries to emerge again as a stand-alone company”. This shows a more positive side to bankruptcy it displays how a business can still run despite having major legal matters that are going on.
According to Meeks, “ The blunt truth is, there are few places more inviting for a trouble company to hide than wrapped in the cloak of a Chapter 11 bankruptcy proceeding. The company is allowed to shed debt like a snake sheds its skin. And although a company in chapter 11 must operate under tight constraints it does so with little worry about competitive market forces”. This shows how some companies use Chapter 11 bankruptcy as a shield to hide their indiscretions so that they can remain competitive in the market. Scott Cleland, president of the Precursor Group states, “ Indeed, when emerging from a Chapter 11 bankruptcy a company like WorldCom finds itself lean, mean and hungry. WorldCom may even set off a pricing war because it’s able to undercut the current market price to gain rapid market share”. This means for WorldCom that they have a chance to turn a bad situation into a good one due to fact of the endless possibilities of growth and change that can happen due to the bankruptcy.
In recent news personal bankruptcies have grown at a record pace with an amazing 1.6 million Americans filing for bankruptcy. The American Bankruptcy Institute stated, “ that personal bankruptcy filings totaled 1,613,097-an all time high for any 12-month period. The figure was up 10 percent from the 1,466,105 cases filed in the 12-month period that ended June 30,2002”. This shows a dramatic increase in personal bankruptcies of the previous 12-month period. Samuel Gerdano, an executive director of the institute states, “ The main reason for the surge was consumers’ growing debt. The latest bankruptcy record reflects the continuing hangover from the binge consumer spending and consumption of the late 1990s. Consumers, aided by historic low interest rates, helped make the last recession a shallow one, but at the cost of adding to already high household debt burdens”. This statement shows how consumer spending did get out of hand during this period like it did in the late 1990s.
In my paper I presented a slightly different view on the bankruptcy issue. I touched on the terminology, the different types, what kind of question are generally asked, a company called WorldCom and their bankruptcy issues and personal bankruptcies within American today. And personally I feel that I have a better understanding of bankruptcy and a more visual concept of what bankruptcy really means. It is not a term that sends fear to business owners instead it is a tool that can more useful than hurtful. Most businesses today use bankruptcy as a tool or in other words another chance to start over and fixed and past mistakes that may have contributed to their downfall. Some companies survive after bankruptcy and others fall apart into further debt. To me the companies that do succeed represent “the phoenix” which is a Greek bird that dies in the fire but is reborn again because of that same fire that took it life. This means that bankruptcy can be seen as another chance to be successful. And for those that can figure out the formula to success despite a previous downfall the benefits can be beyond comprehension. What I have learned from the articles I read and the book is that bankruptcy can be used as an advantage or disadvantage depending on the individuals experience in the wide world of business.
