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Category Archives: Bankruptcy

Byton Close To Bankruptcy With Missed Payments, Production Halted – InsideEVs

Posted: November 5, 2021 at 10:00 pm

When Byton unveiled the M-Byte electric SUV in 2018, it seemed like a very credible EV that looked close to production and we were expecting to see it make its market debut in 2019, with full-scale production planned for 2022. That has not happened according to plan and in the meantime rivals (like XPeng or Nio) that didnt seem as advanced at the time have launched similar models, and now Byton looks set to go under.

We last reported on Byton back in mid-2020 when the company suspended its activity and it was idling its factory, and we attributed that to the pandemic. However, the company doesnt seem to have recovered in months since and now, according to Nikkei Asia, its main business unit, Nanjing Zhixing New Energy Vehicle Technology Development, is being forced in court by a creditor to begin the bankruptcy procedure.

The source points out that Bytons troubles began in September of 2019 when several factors negatively affected the company: one round of funding led by FAW failed, there was a management change and then the pandemic hit. An unnamed source within the company familiar with the situation also said back then that

It will probably be very difficult for Byton to revive

Now, two years later, things are still not looking up for the company that in 2020 had some 1,000 employees in China and around 500 more in other countries, mainly the United States. Its main backer was Chinas FAW Group, which has since shifted its focus to its own HongQi (Red Flag) brand, and early investors included Tencent Holdings, as well as the Foxconn Technology Group.

In September of 2020, Byton was looking to raise close to $300-million from FAW, but that didnt materialize and a few months later Foxconn stopped its investment and then another backer, the investment arm of the Nianjing government also pulled its funding, making Bytons recovery appear highly unlikely.

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Byton Close To Bankruptcy With Missed Payments, Production Halted - InsideEVs

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Ingram and Debitetto on Bankruptcy and Compliance Programs | Health Care Compliance Association (HCCA) – JDSupra – JD Supra

Posted: at 10:00 pm

Theres no guarantee that any company wont end up in Chapter 11 or wont acquire another company going through it. When either happens, there are serious implications for the compliance team.

As Kasey Ingram, General Counsel & Chief Compliance Officer at ISK Americas and Rocco Debitetto, Partner at Hahn Loesser & Parks explain in this podcast, while the importance of compliance doesnt change during a bankruptcy, the environment in which it operates transforms Seemore+

As Kasey Ingram, General Counsel & Chief Compliance Officer at ISK Americas and Rocco Debitetto, Partner at Hahn Loesser & Parks explain in this podcast, while the importance of compliance doesnt change during a bankruptcy, the environment in which it operates transforms dramatically.

Chapter 11 is designed to help the company breathe, reorganize, redeploy its assets and hopefully continue to operate. But while for rank and file employees it is likely business as usual (with a good amount of stress added) for management its a frantic time. More, who and where compliance reports may be very different.

The debtor in possessions appoints officers and managers to run the company, and these individuals may be different than the people the compliance team had reported to. They also are focused on, as quickly as possible, saving the company and getting it back on its feet. Compliance is not a priority.

As a result, its important for compliance to do two things quickly. First, make sure the new management knows who the compliance team is and what it does. Second, let them know that you are not there to get in the way but to help avoid potential problems that will add greater complexity to the reorganization efforts.

On a tactical level theres a need to ensure that leadership, when reviewing contracts, knows which ones are essential to running the compliance programs. Canceling the helpline contract, for example, may save money but should not be on the table.

Compliance also needs to be on the lookout for empty chairs. Chapter 11 is typically a time when there is substantial turnover. Keep a vigilant eye out for departures by people who have compliance responsibilities, and be prepared to backfill the positions.

What happens if your company is healthy and acquiring a company out of Chapter 11? Expect insufficient time to do the standard due diligence.

The good news is that the US Department of Justice generally understands that post-acquisition due diligence may be necessary, but dont wait too long to do it. Then if you find issues, be sure they are addressed promptly.

In sum, even if bankruptcy seems far away, its worth taking the time to listen to this podcast. Even seemingly healthy companies can take a sudden downturn, or acquire another entity that is in Chapter 11. Seeless-

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Ingram and Debitetto on Bankruptcy and Compliance Programs | Health Care Compliance Association (HCCA) - JDSupra - JD Supra

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Sixth Circuit Affirms Holding that Contributions to a 401(k) Plan Made More than Six Months Prior to Bankruptcy Cannot be Excluded from Disposable…

Posted: at 10:00 pm

The U.S. Court of Appeals for the Sixth Circuit recently ruled in a case involving a Chapter 13 debtors attempt to shield contributions to a 401(k) retirement account from projected disposable income, therefore making such amounts inaccessible to the debtors creditors.[1] For the reasons explained below, the Sixth Circuit rejected the debtors arguments.

Case Background

This appeal involves the Chapter 13 bankruptcy filing of a husband and wife (the Debtors). The issue on appeal was whether the Debtors could exclude future 401(k) contributions from their disposable income and creditors. The Husband/Debtors work and prior 401(k) contribution history weighed heavily in the Sixth Circuits analysis.

As part of their petition, the Debtors sought to exclude $1,375.01 per month from their disposable income as voluntary contributions to Husband/Debtors 401(k) plan. The Chapter 13 Trustee objected to the exclusion and the bankruptcy court ruled in favor of the Trustees argument. The Debtors appealed to the District Court, which affirmed the bankruptcy courts ruling, and then Debtors appealed to the Sixth Circuit.

Analysis

As a general principle, a Chapter 13 bankruptcy debtor may obtain some relief from his/her debts while retaining his/her property. However, in order to receive such protection, a debtor must agree to and abide by a court-approved plan under which he/she pays creditors out of future income. In general, a debtor must commit all projected disposable income to the payment of creditors for a fixed period of time.

The Sixth Circuit explained that while the Bankruptcy Code does not define projected disposable income, it does define disposable income as a debtors current monthly income . . . less amount reasonably necessary to be expended . . . for the maintenance or support of the debtor. 11 U.S.C. 1325 (6)(2).

Current monthly income is defined as the average monthly income from all sources (other than those specifically excluded) that the debtor [has] receive[d] in the six months preceding filing for bankruptcy. 11 U.S.C. 101(10A).

This case, therefore, boiled down to whether the post-petition amounts the Debtors intended to contribute to a 401(k) plan constitute projected disposable income. The Sixth Circuit ruled that such amounts should be treated as projected disposable incomes that are available to pay creditors.

In its analysis, the Sixth Circuit noted that, prior to the 2005 amendments to the Bankruptcy Code, there was consensus among the bankruptcy courts that wages voluntarily withheld as 401(k) contributions formed part of a debtors disposable income. Therefore, such amounts were routinely available to unsecured creditors as part of a Chapter 13 plan.

After 2005, following the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), bankruptcy courts began adopting different approaches for the treatment of 401(k) contributions as disposable income.

The splintering of opinionswith four competing approaches adopted by different courtsresulted from what is known as the hanging paragraph in Section 541(b)(7)(A) of the Bankruptcy Code, which defines what property should not be included as property of the estate in a bankruptcy case. While Section 541(b)(7)(A) provides that amounts withheld by an employer for contribution to an employees 401(k) plan are to be excluded from property of the estate, the hanging paragraph at the end of the section states except that such amount under this subparagraph shall not constitute disposable income as defined in section 1325(b)(2).

In analyzing this case, the Sixth Circuit revisited its ruling in Davis v. Helbling (In re Davis), which also involved a debtor who sought to exclude future 401(k) contributions from disposable income. The key difference from this case, however, is that in Davis the debtor had been steadily making 401(k) contributions for at least six months prior to bankruptcy.

Accordingly, in Davis, the Sixth Circuit concluded that the hanging paragraph is best read to exclude from disposable income a debtors post-petition monthly 401(k) contributions so long as those contributions were regularly withheld from the debtors wages prior to her bankruptcy.

In this case, the Debtors did not make 401(k) contributions during the six months prior to bankruptcy. The Debtors argued that this shouldnt matter, and grounded their arguments in equity. They urged the Sixth Circuit to consider the totality of circumstances and assess the husbands good faith. They argued that the husbands consistency in contributing to his 401(k) account in the years preceding the six-month lookback period should be relevant, and that Davis interpretation of the hanging paragraph would be inequitable on these facts.

The Sixth Circuit rejected all of these arguments. It held that the bankruptcy codes text does not permit a Chapter 13 debtor to use a history of retirement contributions from years earlier as a basis for shielding voluntary post-petition contributions from unsecured creditors.

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Sixth Circuit Affirms Holding that Contributions to a 401(k) Plan Made More than Six Months Prior to Bankruptcy Cannot be Excluded from Disposable...

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Bankruptcy Alert for New England States, NY, RI, and DE – The National Law Review

Posted: November 3, 2021 at 10:12 am

DebtorName

OtherNamesDebtorsUsed

BusinessType

BankruptcyCourt

Assets

Liabilities

FilingDate

Grupo PosadasS.A.B. de C.V.(Mexico City,Mexico)

GrupoPosadas,Posadas,GPO

TravelerAccomm-odations

ManhattanNY

$500,000,001to$1,000,000,000

$500,000,001to$1,000,000,000

10/26/21

Operadora delGolfo de MexicoS.A. de C.V.(Mexico City,Mexico)

OGM

TravelerAccomm-odations

ManhattanNY

$10,000,001to$50,000,000

$100,000,001to$500,000,000

10/26/21

GTTCommunications,Inc.(McLean, VA)

GlobalTelecom &Technology,Inc.

Telecom-munications

ManhattanNY

$1,000,000,001to$10,000,000,000

$1,000,000,001to$10,000,000,000

10/31/21

CommunicationsDecisions SNVC, LLC(McLean, VA)

N/A

Telecom-munications

ManhattanNY

$1,000,000,001to$10,000,000,000

$1,000,000,001to$10,000,000,000

10/31/21

Core 180, LLC(McLean, VA)

N/A

Telecom-munications

ManhattanNY

$1,000,000,001to$10,000,000,000

$1,000,000,001to$10,000,000,000

10/31/21

Electra Ltd(McLean, VA)

N/A

Telecom-munications

ManhattanNY

$1,000,000,001to$10,000,000,000

$1,000,000,001to$10,000,000,000

10/31/21

GC Pivotal, LLC(McLean, VA)

GlobalCapacityLimited,AccessPoint, Inc,Transbeam,Inc.

Telecom-munications

ManhattanNY

$1,000,000,001to$10,000,000,000

$1,000,000,001to$10,000,000,000

10/31/21

GTT Americas,LLC(New York, NY)

*See below

Telecom-munications

ManhattanNY

$1,000,000,001to$10,000,000,000

$1,000,000,001to$10,000,000,000

10/31/21

GTT GlobalTelecomGovernmentServices, LLC(McLean, VA)

N/A

Telecom-munications

ManhattanNY

$1,000,000,001to$10 Billion

$1,000,000,001to$10 Billion

10/31/21

GTT RemainCo,LLC(McLean, VA)

GTTRemainCo-1, LLC

Telecom-munications

ManhattanNY

$1,000,000,001to$10 Billion

$1,000,000,001to$10 Billion

10/31/21

GTT ApolloHoldings, LLC(McLean, VA)

N/A

Telecom-munications

ManhattanNY

$1,000,000,001to$10 Billion

$1,000,000,001to$10 Billion

10/31/21

GTT Apollo, LLC(McLean, VA)

N/A

Telecom-munications

ManhattanNY

$1,000,000,001to$10 Billion

$1,000,000,001to$10 Billion

10/31/21

245 Park AvenueProperty, LLC(New York, NY)

N/A

RealEstate

WilmingtonDE

$1,000,000,001to$10 Billion

$1,000,000,001to$10 Billion

10/31/21

HNA 245 ParkAve JV LLC(New York, NY)

N/A

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Bankruptcy Alert for New England States, NY, RI, and DE - The National Law Review

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The Purdue bankruptcy plan was approved. Where is the money? – STAT

Posted: at 10:12 am

Nearly two months ago, a U.S. bankruptcy court judge approved a controversial Purdue Pharma plan that would funnel billions of dollars to pay for the harm caused by the OxyContin opioid painkiller.

At the core, the deal calls for some members of the Sackler family which controlled Purdue to contribute more than $4.3 billion over nearly a decade to compensate individuals, state and local governments, and tribal communities for the cost of the opioid crisis. The deal was in response to some 3,000 lawsuits that prompted the company to seek bankruptcy in 2019. But even though the plan was approved, the money hasnt started flowing and it remains unclear when that will happen.

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The Purdue bankruptcy plan was approved. Where is the money? - STAT

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$500 million Los Angeles mega mansion The One now in bankruptcy – The Mercury News

Posted: at 10:12 am

By Steven Church and John Gittelsohn | Bloomberg

The developer of one of the biggest homes ever built in the U.S. featuring a moat and 30-car garage filed for bankruptcy to keep lenders from foreclosing on the Los Angeles property.

Dubbed The One, the mansion was being developed by Crestlloyd LLC when a fight broke out with lenders, including Hankey Capital. The lenders went to court in Los Angeles claiming they werent being paid, according to court papers. Eventually, a receiver was appointed to handle the project.

Crestlloyd believes that the receiver has hampered efforts to complete the property, as well as to market, show, and sell the property in its current state, the company said in bankruptcy court papers.

Related: Worlds priciest home: O.C. designer creates a plan for $500 million L.A. giga-mansion

Ted Lanes, the court-appointed receiver, declined to comment Wednesday.

Im disappointed, Don Hankey, whose specialty is subprime auto financing, said about the bankruptcy filing. All we want is to get our capital returned.

Hankey, who loaned more than $82.5 million for the project, had a foreclosure sale of the property set for Wednesday.

The developer of one of the biggest homes ever built in the U.S. featuring a moat and 30-car garage filed for bankruptcy to keep lenders from foreclosing on the Los Angeles property.(Handout rendering)

The developer of one of the biggest homes ever built in the U.S. featuring a moat and 30-car garage filed for bankruptcy to keep lenders from foreclosing on the Los Angeles property. (ED CRISOSTOMO, ORANGE COUNTY REGISTER)

An artists rendering shows fountains that surround the upper floors of The One.

An artists rendering shows the rear of The One, a 104,000-square-foot Bel Air compound designed by Paul McClean of Orange. The home is angled to oversee west Los Angeles and downtown L.A. off in the distance.

An artists rendering shows lounge tables and booths that appear to float in an outdoor pool at the base of a two-story-high waterfall. Just inside from the floating lounge is the homes discotheque. In addition to a 74,000-square-foot main house, the compound has a guest house and staff quarters totaling another 8,150 square feet, city records show.

An aerial photo shows construction under way at the 104,000-square-foot compound, on a 4-acre lot thats about 2 1/3 football fields long. Developer Nile Niami broke ground in 2014 and is expected to complete construction in late 2017. He says he is asking $500 million for the compound when its finished. Although some West Los Angeles brokers are skeptical, they say its still possible its sale price will surpass the world record of $301 million.

Property developers sometimes use bankruptcy as a way to block lenders from foreclosing. Under Chapter 11 rules, lawsuits, including state foreclosure actions, are halted to give a company the chance to reorganize and clear its debts.

The One is worth about $325 million, but only has $176 million worth of secured loans attached to the property, Crestlloyd claimed in court papers. Even if the property sells for half its original $500 million price, theres still plenty of value to pay all the debts, Crestlloyd said.

Lanes planned to list the home for $225 million. The 105,000-square-foot (9,750-square-meter) main house almost twice the size of the White House features four swimming pools, a two-story waterfall, a nightclub, movie theater, four-lane bowling alley, beauty salon, spa, gym and cigar lounge.

The case is Crestlloyd LLC, 21-bk-18205, U.S. Bankruptcy Court, Central District of California (Los Angeles).

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$500 million Los Angeles mega mansion The One now in bankruptcy - The Mercury News

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[COLUMN] Bankruptcy can be the first step to financial recovery – Asian Journal News

Posted: at 10:11 am

I remember the story of a poor, old beggar who died one day- and to everyones surprise, a money belt found wrapped around his waist contained thousands of dollars in cash. Apparently, he had found the money belt while digging through trash, decided to keep it but never really opened it. Thus, he lived the rest of his days without even knowing what he had. Had he known about what was available to him to alleviate some of his suffering, life could have been a little better.

The story of this poor, old beggar comes to my mind when I see how many people continue to suffer needlessly in debt when the law provides a remedy for them to change their financial situation for the better. By saying this, I realize that some people may accuse me of being biased in favor of bankruptcy because I make my living as a bankruptcy attorney. I urge you, however, to keep an open mind at least for a moment as you read this article. What I hope to accomplish here is to make you understand that the purpose of our laws is to help and not hurt people. So, stay with me here for a few minutes.

The legislative intent of Congress in passing our bankruptcy laws is to allow a fresh start to those honest individuals who have found it impossible to cope with debt problems. Because life is not perfect, Congress realized that a person who needs to recover financially after experiencing serious debt problems should at least be given a chance to do so. This concept of a fresh start is the foundation of our bankruptcy laws and has become an integral part of our economic system and our society.

Because money affects almost all areas of our lives, money problems can have an extremely devastating effect on the family, our most fundamental social structure. It is probably fair to say that it is the families of this country that ultimately benefit from the protection afforded by our bankruptcy laws. Can you imagine how many families suffering in debt could possibly be out in the streets right now if it werent for the fresh start that our bankruptcy laws provide? For parents with dependent children, the challenges presented by insurmountable debt problems are even bigger because ultimately, the childrens welfare may be at risk.

So, bear in mind if you are considering bankruptcy as a possible solution to your debt problems that the purpose of our bankruptcy laws is to make financial recovery attainable as soon as possible to those who need it. Of course, this does not mean that filing bankruptcy is always the solution to every financial problem. Your bankruptcy lawyer must carefully review your situation, weigh the pros and cons, and make appropriate recommendations. When filing, there must be a clear objective and the chances of success for the type of bankruptcy being filed must be assessed. Is it your objective to eliminate debts you can no longer afford to pay, or do you simply need to consolidate your debts to make them more manageable? Are important legal rights or your assets at stake? What can be done to protect them and at what expense? These are some of the questions that must be answered.

If you would like to explore bankruptcy as possible option in getting out of debt, please call TOLL FREE 1-866-477-7772 to schedule an appointment.

* * *

NOTE: Due to virus safety concerns, I am offering free consultations BY PHONE OR VIDEO to anyone who needs help in dealing with their debt problems.

* * *

None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped over 5,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call RJB Law Offices at TOLL FREE 1-866-477-7772.

(Advertising Supplement)

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[COLUMN] Bankruptcy can be the first step to financial recovery - Asian Journal News

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Subtle Form of Implicit Bias?: Study Finds Black Americans Are More Likely to Have Their Bankruptcy Filing Dismissed or Steered Toward Filing Chapter…

Posted: November 1, 2021 at 6:49 am

African-Americans are as much as 28 percent more likely to be dismissed from bankruptcy proceedings than non-Black bankruptcy filers, contributing to the widening wealth gap existing in the U.S., experts are reporting.

A bankruptcy dismissal closes your bankruptcy case, which means loss of protection of the automatic stay (the order that prohibits creditors from collecting debts). The bankruptcy petitioner continues to be liable for his debts.

Stock photo (Pexels)

A recent study released by the University of Pennsylvanias Wharton School of Business reveals bias in bankruptcy dismissal rates. This study, along with a 2012 report, found that Black Americans were more likely to be advised to enter Chapter 13 versus Chapter 7 bankruptcy proceedings, revealing implicit bias existing in bankruptcy advice and proceedings.

Led by Wharton finance professor Sasha Indarte, researchers found that Black bankruptcy filers were more likely to have Chapter 7 and Chapter 13 bankruptcy cases dismissed by the court.

A bankruptcy dismissal occurs for a variety of reasons. If a judge believes there has been intentional misconduct on the part of a filer or if forms have not been submitted correctly to the court. But one of the most common reasons: failure to repay debts filed under Chapter 13.

When a case is dismissed, this means someone goes through all the hassle of trying to file for bankruptcy, but they dont actually get the debt relief by the end of the process, Indarte said during an interview with Wharton Business Daily on SiriusXM.

When we see that Black filers are much more likely to get their cases dismissed, that means theyre getting access to debt relief at a much lower rate.

The study found that Chapter 7 cases for Black filers were 4 percent more likely to be dismissed than non-Black filers. The average dismissal rate for bankruptcy is 2 percent. Chapter 13 has a dismissal rate of 50 percent.

Yet Black filers consistently face an 80 percent chance of having their bankruptcy dismissed. In addition, Black filers using Chapter 13 were 28 percent more likely to be dismissed than other filers.

Learn more about the revealing study at Finurah.

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Subtle Form of Implicit Bias?: Study Finds Black Americans Are More Likely to Have Their Bankruptcy Filing Dismissed or Steered Toward Filing Chapter...

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Medical debt is the leading cause of bankruptcy, data shows: How to reduce your hospital bills – Fox Business

Posted: at 6:49 am

Filing for bankruptcy can discharge your medical debt, but it can leave a lasting negative impact on your creditworthiness. (iStock)

Unpaid medical bills are a costly burden that can leave a longstanding blemish on your credit history and send debt collectors to your doorstep. Medical bills can even be a potential roadblock for patients who become hesitant to seek care.

Nearly 1 in 5 Americans has medical debt in collections, meaning that millions of consumers were unable to pay for often necessary medical care. In fact, medical debt is the largest single cause of bankruptcy in America, according to the National Consumer Law Center (NCLC), and more than half of debtors have medical debt as a part of their bankruptcy filings.

Declaring bankruptcy can be an effective way to achieve medical debt forgiveness, but it comes with consequences. Chapter 7 bankruptcy can last on your credit report for up to 10 years, according to TransUnion. This could make it more difficult to qualify for credit, like a mortgage or student loans.

Thankfully, there are a few ways you may be able to reduce your medical debt or even have your hospital bills forgiven. Keep reading to learn more about your options for medical debt relief, including financial aid and debt consolidation loans.

If you decide to borrow money to pay off your hospital bills, make sure you're getting the lowest interest rate possible by comparing offers on Credible.

HOW MUCH SHOULD LIFE INSURANCE COST? SEE THE BREAKDOWN BY AGE, TERM AND POLICY SIZE

Medical bill negotiation is a tactic that patients can use to reduce the cost of care. You may qualify for a discount on your medical bills even if you don't have a low income. Use these strategies to speak with a health care provider, medical billing advocate or your insurance company:

Even after negotiating your medical bills, though, you may still owe debt to a collections agency. If you believe there was an error during the medical billing process that you can't resolve, get in touch withyour state's insurance commissioner.

HOW THE CORONAVIRUS PANDEMIC CAN IMPACT YOUR PERSONAL FINANCES

Some patients may be tempted to put their unpaid medical debt on a credit card. But taking out high interest rate credit card debt can be an expensive way to pay off medical bills. Here are a few other ways to get out of medical debt.

Nonprofit hospitals are required by federal law to offer financial aid to low-income patients, and often, that help comes in the form of an interest-free payment plan. This is a way to break up your medical debt into monthly payments so you can spread out the cost of care over time.

However, not all medical providers will offer this type of payment plan. For-profit health care centers and elective procedures may not be covered by this law. But before you borrow money to get out of medical debt, ask your health care provider if an interest-free payment plan is an option.

AVERAGE PERSONAL LOAN INTEREST RATE IS 9.58%, BUT YOU MAY QUALIFY FOR A LOWER RATE

Taking out a small personal loan can be a wayto fund elective medical procedures like dental work and cosmetic surgery. But you can also take out a personal loan to consolidate existing medical debt.

Personal loans offer fast, lump-sum funding that's repaid in fixed monthly payments over a set period of time, typically a few years. You can use a personal loan calculator to estimate your monthly payments. They're also usually unsecured, which means you don't have to put up collateral to get the loan.

Personal loan interest rates vary widely depending on the loan amount and length of the loan, as well as your credit history. So if you decide to borrow a personal loan, it's important to check your eligibility and compare offers among multiple lenders to make sure you're getting the lowest rate for your situation.

You can get pre-qualified on Credible and compare personal loan rates tailored to you, all without impacting your credit score.

SEPTEMBER IS LIFE INSURANCE AWARENESS MONTH: ARE YOU SUFFICIENTLY COVERED?

Mortgage rates are at historic lows while home equity is at an all-time high, making it a great time to consolidate debt with cash-out mortgage refinancing.

Cash-out refinancing is when you take out a larger mortgage to repay your current one, tapping into the difference with cash. It's commonly used for debt consolidation, which can include medical expenses.

That said, cash-out mortgage refinancing isn't right for everyone. For example, it may not be wise to take out a new mortgage that's worth more than your home's true value. Plus, mortgage refinancing comes with closing costs that may offset the benefit of a lower rate.

Get in touch with an experienced loan officer at Credible to see if refinancing for debt consolidation is right for you.

AOC AIMS TO EXTEND PANDEMIC UNEMPLOYMENT INSURANCE: WHAT TO DO IF YOU NEED CASH NOW

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert atmoneyexpert@credible.comand your question might be answeredby Crediblein our Money Expert column.

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Medical debt is the leading cause of bankruptcy, data shows: How to reduce your hospital bills - Fox Business

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How to file for bankruptcy or liquidation in case of business failure in the UAE? – Khaleej Times

Posted: at 6:49 am

If an entity is unable to pay its debts to its creditors, it may opt to file for bankruptcy, this is in accordance with Article 67 of the UAE Bankruptcy Law 2016

Published: Sun 31 Oct 2021, 11:03 AM

Last updated: Sun 31 Oct 2021, 11:07 AM

Question: I am a partner of a small civil company with a professional license issued by DED.

My company has lost court cases wherein we have to pay Dh1 million. These cases are in the execution stage.

My company also has debts of Dh364,000 on our books. The company is not in a position to pay the proven debts in execution court or the pending debts mentioned in our books. I want to close the civil company.

Is it better for me to file for bankruptcy or file for liquidation of the company? How do I do it?

Answer: Pursuant to your queries, as you are desirous to file bankruptcy of your civil company the provisions of Federal Law By Decree No. 9 of 2016 on Bankruptcy (the UAE Bankruptcy Law 2016), Federal Decree-Law No. 23 of 2019 amending Certain Provisions of the Federal Decree-Law No. 9 of 2016 on Bankruptcy (the Amended UAE Bankruptcy Law of 2019) and the provisions of Federal Decree-Law No. 21 of 2020 (Amended UAE Bankruptcy Law of 2020) shall be applicable.

In the UAE, if an entity is unable to pay its debts to its creditors, it may opt to file for bankruptcy, this is in accordance with Article 67 of the UAE Bankruptcy Law 2016, which states, The procedures in this Chapter shall regulate:

1. The restructuring of the Debtor, if possible, by assisting the Debtor to implement a plan to restructure the Debtors Business.

2. The declaration of the Debtors bankruptcy and carrying out a fair liquidation of the Debtors assets to cover the Debtors Liabilities.

Further, you may approach the court in the UAE which has jurisdiction over the bankruptcy proceedings. This is in accordance with Article 68 of the UAE Bankruptcy Law 2016, which states, The Debtor shall apply to the Court to commence the procedures pursuant to the provisions of this Chapter, if the Debtor has ceased to make payment of the Debtors Debts on their respective due dates for more than thirty (30) consecutive Business Days due to the Debtors distressed financial condition, or if the Debtor is in a state of Over-indebtedness.

If the court approves the application for bankruptcy of your company, it may suspend all the execution proceedings against your company if the same has been filed by your companys creditors who have judgments against your company.

Thereafter, the court may appoint a trustee as mentioned in Article 82(1) of the Amended UAE Bankruptcy Law of 2019 to foresee the bankruptcy procedures and the said trustee shall submit his/her report to the court in accordance with Article 96 of the UAE Bankruptcy Law 2016.

The report of the trustee may include restructuring of your debts. However, if you are not convenient with the restructuring procedures, the court may pass an order declaring your company as bankrupt.

This is in accordance with Article 124 (3) of the UAE Bankruptcy Law 2016, which states, The Court shall issue a judgment declaring the Debtor bankrupt and ordering the liquidation of the Debtors Assets If the restructuring procedures are inconvenient for the Debtor, pursuant to the statements and documents submitted with the application or the report prepared by the expert pursuant to the provisions of Article (77) of this Law, or the trustees report prepared pursuant to Article (96), confirming the impossibility of restructuring.

Further, you may also file for individual insolvency in accordance with Federal Decree-Law No. 19 of 2019 on Insolvency.

You may avail services of a legal counsel in the UAE for further advice.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: http://www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

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How to file for bankruptcy or liquidation in case of business failure in the UAE? - Khaleej Times

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