Know more about chapter 7 bankruptcy
Bankruptcy can just be defined as a legal procedure which relieves one from most, if not all of his debts. Few people think that bankruptcy will not affect them, but they are wrong. Today the consumer spending has increased, credit cards are easily available and with the increase in rate of interest, the personal bankruptcy concept is getting bigger and bigger. There are free bankruptcy services available which can help people to emerge out of debts. The laws of bankruptcy are very complex and one should contact an attorney before he takes a decision. The laws of bankruptcy differ from state to state thus one should make sure that the lawyer he chooses is expert.

People usually choose between a chapter 7 bankruptcy and chapter 13 bankruptcy. The chapter 7 bankruptcy lawyer are used when a person is unable to pay off his existing debts. According to the new law, those applicants who wish to file bankruptcy chapter 7 shall meet some eligible requirements under a “means test”. In this test those applicants whose present monthly income is less than the medium income in his state, can file for bankruptcy.

Thus all the individuals who wish to file chapter 7 bankruptcy or chapter 13 bankruptcy has to give their proof of income by the federal tax returns. If one is ineligible for filing chapter 7 than he can file chapter 13 bankruptcy. In chapter 13 the debtor enters in a five year of repayment plan where he has to pay some amount to the creditors depending on the expense to income formula.

The judgment of bankruptcy is saved in the credit history and it stays there for next seven to ten years. There are many online services for bankruptcy which can be helpful. One can even file bankruptcy online and lessen his loads. The number of online services are increasing day-by-day, thus it’s better to have a look on them on daily basis. A distressed person can make things more manageable and easy with the expert counselor and bankruptcy services.

Avail free bankruptcy services here!

The bank is withdrawing some of its cheap short-term loans designed to boost the amount of money available in the markets and encourage bank lending.

ECB president Jean-Claude Trichet said he had asked the banks “to do their job. We have helped them considerably.”

The comments came as the Bank left interest rates on hold at 1% – the lowest level in its 10-year history.

ING senior economist Carsten Brzeski said: “The gentle exit has begun. Today’s message to banks was crystal clear: do your homework, free refills are coming to an end.”

Specifically, Mr Trichet said the 12 month loan offering in December would be the last one and the six month offering will end in March.

Mr Trichet said: “The improved conditions in financial markets have indicated that not all our liquidity measures are needed to the same extent as in the past.”

He also said that the current interest rate was “appropriate”.

The forecast for growth in the eurozone in 2010 was also raised to between 0.1% and 1.5%, up from a previous prediction of between -0.5% and 0.9%.

But Mr Trichet warned that the recovery process would be “uneven and subject to risks”.

Separately, the European Union’s Eurostat agency confirmed that the eurozone economy grew by 0.4% in the third quarter of 2009.

Seven of the nine members of the Monetary Policy Committee (MPC) voted for the £25bn extension, one voted for a higher amount and one for no change.

The members were, however, unanimous in the decision to keep interest rates at a record low of 0.5%.

The Bank has pumped billions into the economy to try to stimulate demand.

Under the programme – known as quantitative easing (QE) – the Bank has pursued a policy of injecting money into the economy through buying bonds from banks and other companies.

The second “no” vote is the more interesting, since it came from the Bank’s chief economist, Spencer Dale, who preferred to leave policy unchanged Stephanie Flanders, BBC economics editor Stephanie Flanders on the MPC split

The decision to pump an extra £25bn into the economy brings the total planned spending under the policy to £200bn.

Inflation risk

Minutes of the meeting showed that MPC member David Miles called for the stimulus programme to be extended by £40bn.

This would “provide greater insurance against the downside risks to growth and inflation arising from constrained credit supply,” the notes said.

However, Spencer Dale, the Bank’s chief economist, argued that any extension might push inflation higher, and beyond the 2% target. He voted for the programme not to be expanded.

On Tuesday, official figures showed that CPI inflation had risen to 1.5% in October, up from 1.1% in September.

Last week, Bank governor Mervyn King said it was “open minded” about extending QE further.

Analysts said the minutes showed that further extensions could be unlikely.

“I wouldn’t rule out any further purchases, particularly if things turn out weaker and third-quarter GDP isn’t revised up,” said Collin Ellis at Daiwa Securities.

“But I think the chance has somewhat diminished after these minutes. I think it’s pretty clear the committee overall would like to stop at £200bn.”

Provisional estimates show that the UK economy shrank by 0.4% between July and September.

The New York Fed paid AIG’s business partners face value for securities so they would cancel insurance-like contracts AIG had written.

But officials used a weak negotiating strategy, Special Inspector General Neil Barofsky’s report said.

AIG was initially bailed out for $85bn (£50bn), but its total rescue package eventually amounted to over $180bn.

The report criticised both the Federal Reserve Bank of New York and the US Federal Reserve for failing to use their “considerable leverage” to force AIG’s counterparties to accept less than the full amount for the assets.

As a result, 16 banks, including Goldman Sachs, Deutsche Bank, Societe Generale and Royal Bank of Scotland, were paid more than $62bn.

The initial bail-out “was done with almost no independent consideration of the terms of the transaction or the impact that those terms might have on the future of AIG”, the report said.

It also criticised the New York Fed, chaired at the time by current Treasury Secretary Timothy Geithner, for insisting that all banks be treated equally in negotiations and for not treating US banks differently from foreign institutions.

‘Extraordinary circumstances’

The New York Fed and Federal Reserve Board issued a joint letter to accompany the report.

“We believe that the Federal Reserve acted appropriately in conducting these negotiations and that our negotiating strategy, including the decision to treat all counterparties equally, was not flawed or unreasonably limited,” the letter said.

The Treasury Department said that the report overlooked “the central lesson” learned from the AIG rescue.

“The lesson is that the federal government needs better tools to deal with the impending failure of a large institution in extraordinary circumstances like those facing us last fall,” a Treasury spokeswoman said.

She also called for the approval of an Obama administration proposal for new powers to step in and shut such firms down.

The firm, formerly the finance arm of General Motors, was one of 10 US banks told to raise extra funds by the Fed.

In May, the Fed ordered the banks to come up with $74.6bn (£44.5m) of extra funds to boost their cash reserves.

The order came after the government’s “stress tests” determined whether banks could cope if the recession worsened.

Government aid

Nine of the 10 succeeded in raising the required additional capital.

“The one exception, GMAC, is expected to meet its remaining buffer need by accessing the Troubled Asset Relief Programme (TARP) Automotive Industry Financing Program, and is in discussions with the Treasury on the structure of its investment,” the Fed said.

GMAC has received billions of dollars of government aid to combat mortgage losses and to provide funds for Americans to buy cars.

In December last year, the government stepped in with a $6bn bail-out.

In May this year, the Treasury announced that it would provide a further $7.5bn in aid.

In 2006 GMAC became an independent finance company after GM sold a 51% stake in the business.

In May of this year, GM further reduced its stake in the company.

The nine banks that managed to raise enough capital are Bank of America, Wells Fargo, Citigroup, Morgan Stanley, Regions Financial, SunTrust Banks, KeyCorp, Fifth Third Bancorp and PNC Financial.

Nineteen banks were originally stress-tested.

Those that did not require extra funds were Goldman Sachs, JPMorgan Chase, Bank of New York Mellon, MetLife, American Express, State Street, BB&T, US Bancorp and Capital One Financial.

She has asked other countries to look at the lack of competition from banks “on steroids, relying on public money”.

Governments have stepped in to lend taxpayer support to several troubled banks, including Citigroup and Royal Bank of Scotland.

The warning comes as European Union finance ministers meet this week.

“Look at investment banks in the United States where, before the crisis, there were about six. Today there are about three,” Ms Lagarde said.

“I believe that all that doesn’t happen without some effect on competition and abusive behaviour.”

Bonus concerns

She said she had asked the Financial Stability Board – a global financial oversight body formed by the G20 group of richest nations at their meeting in London earlier this year – to examine whether some banks were “in the process of forming oligopolies for certain products in certain markets”.

Ms Lagarde also asked it to look at how any lack of competition between banks is affecting bankers’ pay.

France has been vocal in pressing for more to be done to stop excessive bonuses in the banking sector, saying the huge bonuses on offer are to blame for bankers taking the kind of risks that led to the financial crisis.

French banks, under government pressure, have agreed to curb their bonus payouts.

Some fear this could encourage staff to move elsewhere to earn more.

The sales have been demanded by the European Commission to safeguard competition concerns after the two were bailed out by the UK government.

RBS will sell 318 branches, while Lloyds will dispose of more than 600 branches over the next four years.

Lloyds also confirmed it would stay out of a government-run insurance scheme.

Lloyds, which is 43.5%-owned by the government, will instead raise £21bn, including a £13.5bn rights issue and a £7.5bn debt swap.

But it will have to pay the UK government £2.5bn to avoid joining the Government Asset Protection Scheme (GAPS), which provides state insurance for past toxic loans.

The payment is to cover the “implicit protection” provided by the government since it first offered to insure Lloyds’ book in February.

RBS, meanwhile, has confirmed it will join the scheme on revised – and more expensive – terms, the Treasury said.

“I believe what we have here is a better deal for the taxpayer,” Chancellor Alistair Darling told the BBC.

“It is better in the long run to get private money because at the end of the day, the government does not want to be in the business of running banks,” he added.

The BBC’s business editor Robert Peston suggested the Treasury has now effectively become the biggest hedge fund in the UK.

‘New entrants’

In addition to the sales of RBS branches in England and Wales – originally Williams & Glyn’s, RBS will sell its NatWest brand in Scotland, RBS Insurance and Global Merchant Services, its card payment business.

The total disposal will be 318 branches in the UK, or 14% of the RBS retail network.

“I believe today marks a key milestone in the radical restructuring we are undertaking to bring RBS back to stand-alone strength,” RBS chief executive Stephen Hester said.

RBS said the moves would cut its UK market share by two percentage points in retail banking.

It will also sell its stake in commodities trader RBS Sempra Commodities.

Lloyds will sell at least 600 branches, or about 4.6% of the total market of UK current accounts.

That includes the TSB brand in England, Wales and Scotland and mortgage broker Cheltenham & Gloucester, as well as the Intelligent Finance online business.

Lloyds says the businesses that it will have to sell off account for about £30bn of customer deposits and £70bn of lending, generating income of £1.4bn in the year to December 2008.

Mr Peston said the “forced fragmentation” of UK banks was a priority of outgoing European Competition Commissioner Neelie Kroes.

But Mr Darling insisted the government wanted the break up to happen.

“We were very clear with the Commission that we didn’t want to see the banks move pieces around a board,” he said.

“I would like to see, perhaps three new entrants to the High Street.”

Names like German insurance giant Allianz, Generali and Zurich are being mentioned as potential acquirers for the branches sold by RBS and Lloyds, said Douglas Fraser, BBC Scotland’s business editor.

Asset insurance

Unlike Lloyds, RBS will join GAPS and have £282bn of its assets insured by the taxpayer.

That is less than £325bn of toxic assets first proposed in February, according to the Treasury.

As a result, the UK government’s stake in the troubled banking giant will rise to 84%, though the Treasury said its ordinary shareholding will not exceed 75%.

Under GAPS, the government insures – for a price – some of the expected future losses on past investments made by our banks.

If those losses crystallised, some of them would in effect be transferred to the taxpayer.

However, if they did not, the taxpayer might make a profit on the premiums that the government will have charged.

RBS will pay the UK government £700m a year to be in the scheme, and £2.5bn to exit the scheme if and when that happens.

Both RBS and Lloyds have agreed to increase lending to businesses and property owners by a total of £39bn.

They have also agreed not to pay any bonuses to staff earning more than £39,000 for their performance in 2009.

US consumer spending dropped by 0.5% in September after a 1.4% rise in August – the first fall in five months.

The figures wiped out gains made on Thursday sparked by data showing the US economy was growing again.

Leading US shares lost 2.5%, while French and German shares suffered even greater losses, slumping about 3%.

France’s Cac 40 index fell 106 points, or 2.9%, to 3,608, while Germany’s Dax index shed 172 points, or 3.1%, to 5,415.

The UK’s FTSE also suffered, falling 93 points, or 1.8%, to 5,045, while the US Dow Jones index lost 250 points, or 2.5%, to 9,713.

“Traders may be booking some profits as they look for the next catalyst to emerge to signal that the recent surge in the equity markets was warranted by underlying fundamental economic data,” said broker Charles Schwab.

The price of oil also fell sharply, with US light crude dropping $2.87 to $77 a barrel. London Brent lost $2.79 to $75.25 barrel.

Support measures

The fall in consumer spending in the US coincided with the withdrawal at the end of August of the government’s car scrappage scheme.

The weak spending figures fuelled fears that the strong growth in the US economy between July and September was partly due to such government support measures and that, without them, the recovery might not be as strong as had been hoped.

The government has also introduced an $8,000 (£4,864) tax credit for first-time buyers that is due to expire on 30 November.

Figures released earlier in the week showed that the annual rate of new home sales fell in September, the first fall since March.

Some analysts attributed this fall to the proximity of the 30 November deadline.

Home buyers may be wary of buying this close to the deadline in case they do not finalise the purchase in time to qualify for the credit, they said.

US shares rallied on Thursday on figures that showed the US economy expanding by an annual rate of 3.5% during the third quarter, more than analysts had expected.

They are likely to be asked how much they knew of Merrill Lynch’s problems and bonuses when they agreed to buy it.

Bank of America saved Merrill Lynch from collapse a year ago.

Earlier this week, a US federal judge ruled the bank would have to go to trial to settle allegations it misled shareholders about bonus payments.

District Judge Jed Rakoff rejected the $33m (£20m) settlement between Bank of America and its regulator, the Securities and Exchange Commission.

Bail-out funds

Merrill executives were paid $3.6bn before the deal was closed, despite the bank’s $27.6bn losses for 2008.

Bank of America has neither admitted nor denied the allegations of the Securities and Exchange Commission (SEC).

It was one of the biggest recipients of bail-out funds from the US taxpayer in 2008, needing capital injections at the height of the financial crisis.

It has been reported that Mr Cuomo’s office is planning to file charges against executives at Bank of America for withholding information from shareholders.

The Financial Services Authority said banks should spread two-thirds of the bonuses of senior employees over three years.

But its code of practice, to be introduced next year, excludes specific measures on deferred bonuses as well as the linking of payouts to the performance of banking groups as whole.

The climbdown comes after banks hit back at the proposals.

The specific recommendations in the FSA’s consultation in March were seen to be “too prescriptive” by bank bosses.

Banks claimed that increased deferral reduces the perceived value of a bonus to the individual – so total packages could actually go up as a result of the proposals.

The decision to delay the guidelines’ implementation until 2010 has also been seen as a softer-than-expected approach.

In theory, the move allows banks and brokers to rush through payments at Christmas before the new rules take effect.

But the FSA’s chief executive, Hector Sants, said the new rules need to be put in place to help avoid a repeat of 2008’s banking crisis.

“The FSA is determined that banks’ remuneration policies should be consistent with, and promote, effective risk management.

“The new rules and code of practice, which will take effect from January, next year, are aimed at achieving this.

“Whilst there is general international agreement on the need for supervisory action on remuneration policies and practices we will be the first major financial regulator to take this step. We think that it is important to have rules in place for 2010.”

Speaking on Sky News, the chief executive of the British Bankers’ Association Angela Knight welcomed the move and called on other countries to follow suit.

“The proposals that the FSA has confirmed today are sensible ones we feel.

“The key issue is going to be this: What are our international colleagues going to do?

“Because we do operate very much in a world market.”