GM sheds bankruptcy risk - now comes the hard part

By David Bailey and Kevin Krolicki

DETROIT (Reuters) - By pledging to cut $10 billion in costs, General Motors Corp (GM.N: Quote, Profile, Research) has convinced investors and creditors that the immediate risk of bankruptcy has faded.

After touching 54-year lows, GM shares have rallied by 45 percent this week, and the cost to insure the top U.S. automaker's debt against default has eased.

Now comes the hard part: convincing millions of U.S. consumers to take another look at its more fuel-efficient passenger cars as the company attempts to break its reliance on the fast-sinking market for trucks and SUVs.

"They need to make a transition, but that isn't going to happen overnight, and the transition is going to be difficult," said Standard & Poor's equity analyst Efraim Levy, who expects GM to lose money in the U.S. market through 2009.

Analysts credit GM with taking important steps to revive its car lineup under product czar and Vice Chairman Bob Lutz. For instance, some analysts regard the company's redesigned Chevy Malibu as the best mid-sized sedan on the market.

Malibu sales have risen 31 percent and selling prices for the new car are up by several thousand dollars on average.

But Toyota Motor Corp's (7203.T: Quote, Profile, Research) flagship Camry still outsells the Malibu by an almost 3-to-1 ratio. Honda Motor Co (7267.T: Quote, Profile, Research), the only major automaker to post U.S. sales growth in the first half, sells more than twice as many Accords.

And that highlights a lingering risk with the latest, sweeping restructuring plan GM has unveiled.
http://uk.reuters.com/article/stocksAndSharesNews/idUKZWE86373820080718

Bankruptcy Law - Do You Know What the Bankruptcy Law Means For You?

Are you considering using the bankruptcy law to your benefit? Do you want to know what bankruptcy will do for you? There are reasons why you would use the bankruptcy laws to help you get out of debt, but there are other options as well. Here we go.

If you have debts that are over twice your annual salary, then bankruptcy could be one of your better options. You can use a chapter 7 to clear all the debts or use a chapter 13 to have the courts put together a debt repayment plan for you. This can be the right way to go if you have way too much debt and are desperate.

However, if you are not that deep into debt, then you need to understand that there are other options out there that will cost you no more than the bankruptcy lawyer would cost you. You can use a non profit credit counseling services to help you out. They will not only help you to get out of debt, but they will also counsel you on how to stay out of debt.

You also have the option of going to your priest or pastor in order to get help. They can usually recommend someone in your church to help advise you on your finances and this is done for free. It is usually someone that is a financial advisor, an accountant, or has pulled themselves out od debt in the past. They also have a very good understanding of the bankruptcy law.
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Bankruptcy Terms Explained

Property of the Estate

"Property of the estate" describes the assets that, in any particular bankruptcy proceeding, are to be used to satisfy pre-filing or pre-confirmation debts and the costs of the bankruptcy proceeding. But for the bankruptcy filing, these assets would have belonged to the debtor.
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Bankruptcy Lawyer

Options Other Than Bankruptcy - Credit Counseling

Credit counseling, despite its name, is more a type of debt management counseling. Rather than helping people use their credit, it helps people manage their current debts and, frequently, avoid filing for bankruptcy. While it is frequently seen as a type of credit education, it is really debt counseling.

The procedure of credit counseling involves a debtor creating a debt management plan (DMP). The DMP will be drawn up by a credit counselor who works with a consumer/debtor's creditors to negotiate a repayment plan. Frequently, these plans will involve a lower interest rate or longer time frame than the debtor would have if he or she worked from the original loan or statement. In addition to reducing the interest rates, a DMP will often offer reduced payments and fees.

After a debtor joins a debt management plan, the creditors will close the accounts or restrict future charges. This prohibits the debtor from incurring more debt which would also have to be paid off. A DMP's best feature is that it consolidates all of a consumer's debts into one monthly payment. While the payment might seem high, it is usually less than the amount the consumer would pay if he or she paid all bills individually.

Another feature is the reduction of interest rates. The bank or other creditor feels that he or she has a much better chance of getting money back and so will view a consumer as less of a risk. This allows them to lower the interest rate they charge the consumer. Lowering an interest rate, which on credit cards can be near 30%, allows the consumer to be debt free in 3 to 6 years rather than the 20+ years it could take with normal interest rates.

When a consumer creates a DMP, he or she benefits by having formerly delinquent accounts marked as current. Banks will frequently do this after a consumer makes three monthly payments. It is a show of good faith in the consumer to repay the debt. In addition, this helps a consumer's credit rating. Bills that were listed as "late" or "delinquent" will still appear on a credit report but they will be balanced by "on time" payments.

Bankruptcy - The Ultimate Debt Solution?

At first glance, bankruptcy may appear to be an easy way out of debt problems, but is it the only answer? What is the real cost of bankruptcy? Before considering bankruptcy, there are a multitude of factors that must be considered, many of which are best explained by a specialist debt management company.

The process of going bankrupt is actually quite simple:

• Complete declaration forms available from your local county court.

• Provide details of all assets you own and all debts you owe.

• Pay the associated court fee and administration deposit.

Bankruptcy can be a same-day service! But should you consider it at all?

Following the above steps, you will be issued with a Bankruptcy Order. You will then need to meet the Official Receiver in your area. Their role is to review your circumstances and ensure you meet the conditions of the bankruptcy. This will involve discussing your debts. Once the bankruptcy takes effect, you will be unable to acquire any other kind of debt solution, such as debt management, a consolidation loan, or an IVA.

The duration of bankruptcy usually lasts one year. In 2004 this was reduced from three years. Once you are discharged from your bankruptcy you are able to start again debt free.

Sounds easy doesn't it? Many people think it is an easy option for those in serious debt. However, the negative, long lasting consequences of bankruptcy need to be taken into account as they can have a lasting impact on your life.

You and Your Home

The trustee associated with your bankruptcy has three years to deal with your home or any property you own. During these three years the trustee can:

• Put your property up for sale.

• Have a charging order issued. This means that any money generated by the property, through rent or sale, will got to the trustee.

• Arrange terms for you to buy the trustee's interest in the property. These terms can be arranged with those with whom you share ownership of the property.
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The Basics of Consumer Bankruptcy

The rules of consumer bankruptcy were subject to changes under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). This act resulted in substantial changes to the bankruptcy code. These changes, while they are broad, apply mainly to bankruptcy cases filed on or after October 17, 2005.

The Bankruptcy Code is codified as Title 11 of the United States Code. It has been amended multiple times since its enactment. The code allows for a uniform federal law which governs all bankruptcy cases. This means that it, mostly, does not matter in which state one files for bankruptcy, the rules will be the same.

The procedures for bankruptcy are governed by the Federal Rules of Bankruptcy Procedure. These rules are frequently called the "Bankruptcy Rules". These rules contain a set of official forms for use in bankruptcy cases. The Code and Rules set out a formal legal procedure for dealing with the debts of individuals of businesses.

A large portion of the bankruptcy process is conducted away from the courthouse. There typically is not much time spent in court. A debtor generally won't even appear once the process is underway unless there is an objection raised to some part of the arrangement.

Chapter 7

Chapter 7 bankruptcy is known as Liquidation. It is an orderly, court-supervised procedure involving a trustee. The trustee takes over the assets of the debtor's estate, reduces the assets to cash, and distributes the cash to creditors. The debtor, however, has the right to retain certain exempt properties and the rights of secured creditors.

Generally, there is little non-exempt property in chapter 7 cases. Because of this, there may be little actual liquidation of the debtor's assets. These are known as "no-asset cases."

A creditor holding an unsecured claim will get money from the bankruptcy estate only if the case is an asset case and the creditor has filed a proof of claim with the bankruptcy court.

In chapter 7 cases, the debtor will generally receive an immediate discharge of debts.

Chapter 13

Chapter 13 bankruptcy is known as Adjustment of Debts of an Individual with Regular Income. It is specifically designed for a debtor who has a regular source of income, like a job. It is also used for people who do not qualify for chapter 7 bankruptcy due to the means test.

This form of bankruptcy is frequently preferable to chapter 7 because it allows a debtor to keep a valuable asset like a house and because it allows a debtor to repay creditors over time. The time is determined by income and other factors but is generally between 3 and 5 years.

A chapter 13 debtor retains possession of property in the estate and makes payments to creditors, via the trustee, based on the debtor's anticipated income over the life of the plan. This form of bankruptcy does not allow for an immediate discharge of debts. Instead, the debts are discharged after the debtor completes the payments required under the plan.
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