New Jersey Debt Relief Blog

While there are several notable financial missteps that companies in New Jersey can make that ultimately require them to file for bankruptcy, there are other reasons why unsettling financial problems may occur that are sometimes out of their control. The ebbs and flows of supply and demand and the health of the economy are two factors that could contribute to a company's financial demise even if they have made valuable efforts to secure their assets. 

This is the case for Murray Energy which has long been admired as the largest private coal miner in the nation, but who is now facing bankruptcy with the decreased demand for coal. Though there are negotiations in place to allow the coal giant to receive financial support as it restructures agreements with its lenders, there is evidence of financial problems throughout the company. Lenders have not been paid on time and the company has been unable to pay some of its bills. 

In its heyday, fashion retailer Forever 21 earned a whopping $4.4 billion and made its founders rich beyond their wildest dreams. However, poor expansion decisions and a declining retail climate have resulted in the store filing for bankruptcy. Business Insider explains the factors that led to its decline and what this says to other brick and mortar retailers. 

At the outset, Forever 21's aggressive expansion strategies seemed to work well. With just $11,000 in savings, founders Jin Sook and Do Won Chang opened the flagship Forever 21 store, then called Fashion 21. In the first year, the store made $700,000 in revenue. Every 6 months a new store was opened, which greatly increased the retailer's reach. At one point, Forever 21 had 480 locations in malls throughout America. That same year, the Changs' net worth expanded to $5.9 billion, ranking them among the wealthiest couples in America. 

People will do just about anything to avoid their home being foreclosed upon. This leaves them vulnerable to common foreclosure scams, which prey upon a person's fervent desire to retain their home. Foreclosure scams come in all shapes and sizes, which makes it difficult for homeowners to identify them when they lack the proper information. PennyMac explains a few of the more common scams and how they work so you can be sure to avoid them. 

In some cases, you'll be offered a new mortgage loan with a lower interest rate to take the place of your current one. You'll be asked to fill out paperwork which is claimed to be for the new loan. However, this paperwork is actually being used to transfer the deed for your home to the other person. Once they have ownership, you'll be evicted and the home will be in their possession. Additionally, you'll still be obligated to pay back your existing mortgage loan, leaving you even more at odds financially than when you began.

If there is a certain aspect of a business that isn't performing as well as others, many business owners choose to invest more time and money into it to improve its performance. This isn't always the best strategy, however, as the increased concentration may put other, more successful aspects in jeopardy. In this case, a business divestiture is a group of strategies that allows you to rid yourself of underwhelming assets in an attempt to make the rest of your business stronger. The Balance explains different types of business divestitures and how they work. 

Filing for bankruptcy is a common type of business divestiture. Certain types of bankruptcy entail the liquidation of assets to settle outstanding debt to creditors. While not all types of bankruptcy involve liquidation, Chapter 7 proceedings would require you sell off things like property or equipment. Although Chapter 11 aims to reorganize debt, in some cases it also involves liquidation.