By the way, be sure to check out the article for an awesome "zombie debt" illustration by Michael Meister.

"Dealing With Debt That Refuses to Die" [WSJ.com]

(Photo: fantasysage)

Merrill: If your broker leaves, you have to decide whether you want to go with him. Whether you come along or wait for Bank of America to take over, you will lose access to your funds for a week or two until the new computer systems take over.

Lehman: The brokerage unit didn't file for bankruptcy, the parent unit did. So for now, customers' brokerage accounts remain as normal. Eventually, though, they will get transferred.

AIG: While the situation is dire, they're still in business. Your life insurance policies are still good. If they go bust, state bodies known as guaranty funds will step in and cover unpaid claims and pay out policies.

The integration of different computer databases is always an opportunity for accounts getting messed up or lost. Make sure you have printouts of your recent statement and have all your account numbers and access codes memorized or written down somewhere.

What Changes in the Financial World Mean to Customers [NYT]

A joint investigation by the NYT and 20/20 showed Lehman Brothers did business with mortgage broker First Alliance, charged with making fraudulent mortgages and engaging in predatory lending. First Alliance customers complained about extremely high fees and higher interest rates than what they signed up for. An internal memo by a Lehman brothers exec called First Alliance a mortgage "sweatshop" whose employees "leave their ethics at the door." First Alliance settled charges with the FTC in 2002, and then went out of business.

Lehman Brothers defended its business relationship with the company, calling itself "an underwriter, not a regulator." Today, they finally learned their lesson.

Lehman Had Long Relationship With Suspect Mortgage Brokers [ABC] (Photo: Getty)

• Lehman filed for Chapter 11
• Bank of America bought Merrlil Lynch
• A special trading session was opened Sunday from 2-6pm to allow traders to try to unwind their positions
• The Fed is expected to temporarily make it easier for banks to borrow from the government
• European Central Banks stand ready to pump billions into the global market
• Washington Mutual's new CEO's disclosure of further writedowns and setting aside of capital calmed investors and stemmed the massive selloff of its stock

Should be an exciting day to watch the stock market.

(Photo: Getty)

Earlier today, there was a run on shares of United Airlines' parent company, UAL, following news that the company was filing for bankruptcy. Unfortunately, that news was six years old. Somehow it was republished over the weekend by a Tribune news company without the original dateline, and by the time trading was halted at 12:30pm today, the stock had dropped from $12.30 to $3. The newspapers are still trying to figure out what happened.

According to news aggregation site SmartBrief.com, the South Florida Sun-Sentinel, a Tribune paper, was the first to run the old story about United. It was posted to its Web site at roughly 1 p.m. Sunday.

Sun-Sentinel Online Editor Joe Schwerdt pulled the story off his site shortly before noon this morning, in response to a call Tribune made to Sun-Sentinel editor Earl Maucker.

"I literally just got word a couple minutes ago that there was problem," says Schwerdt. He says he did not know how the old story was posted as new and was unsure if any other Tribune papers ran it. He declined to discuss details about how his paper publishes stories on weekends.

As of the publish date of this post, shares were back up to $10.92, noticeably lower than where they were trading before the news mix-up. Oops.

"How A Botched Web Story Wiped Out UAL's Shares" [Forbes]
(Photo: Cubbie_n_Vegas)

Olevia Files for Bankruptcy [Marketnews]
PREVIOUSLY: Olevia TV-Maker Files For Bankruptcy. Goodbye, Warranties.

1-Syntax-Brillian files for Chapter 11 bankruptcy [Reuters]

The numbers are still nowhere near where they were before 2006 (PDF), when the new bankruptcy laws caused a massive drop in filings. If the trend continues, however, we can expect the number of bankruptcies this year to bring us back up to pre-2006 numbers, says the American Bankruptcy Institute:

"The sharp spike in consumer bankruptcies reflects the growing financial stress faced by American families, saddled with household debt and mortgage woes," said ABI Executive Director Samuel J. Gerdano. "We expect consumer bankruptcies to top 1 million new cases this year".

• Chargebacks can be filed on all tickets, whether they were purchased directly from the airline or from a third-party
• You don't have to take a replacement flight offered by another carrier if you don't want to
• You have 120 days from the date of expected travel to file a chargeback
• Depending on merchant policy, travel insurance may be transferable or redeemable

(Photo: Getty)

Gary L. Patterson, who flew Skybus from Richmond yesterday to visit his girlfriend, said he felt "empty" when he learned he wouldn't be going back the same way. He'd gotten word when a friend called his girlfriend.

Patterson, 42, an Air Force tech sergeant temporarily stationed at Langley Air Force Base, said he's frustrated. He thought "common courtesy" called for at least a week's notice.

But "getting mad is not going to change anything," he said. "It's not going to get me back on Monday morning."

Skybus is not providing alternate transportation.

Patterson planned on getting something to eat and trying to find a way back tomorrow.

Airport: Skybus Airlines Shutting Down [AP]
Skybus shuts down, cancels all flights [The Columbus Dispatch]
PREVIOUSLY: Skybus Airlines Ceases Operations
Skybus Will Try To Mimic Some Other Ultra-Low-Cost Carriers, Just Without The Whole Imploding Aspect
(Photo: marada)

Either that, or
the are-we-in-a-recession and the rise in fuel prices was too difficult an environment for a new airline with a new kind of pricing structure to take off. The way it tried to work was thus: Tickets started at $10 but prices went up as more passengers booked. Carry-on baggage was free but checked baggage incurred additional fees, as did a slew of other basic amenities. To capitalize on in-flight profit potential, outside food or drink was strictly forbidden, stewards sold everything from food to perfume to watches, and advertisements covered every surface, including the outside of the aircraft. Maybe Americans just aren't ready for a "strap me to a high-velocity rail" approach to air travel. This marks the fourth airline to stop, or announce they will soon stop, flying this week.

(Photo: Derek Rust)

PREVIOUSLY: What Do You Do If You Have Tickets On A Bankrupt Airline?
(Photo: $arah Murray)

ATAinsider: The airline lost an important contract [with Federal Express] that involved the AMC [Air Mobility Command] and became financially insolvent. As of this morning, they filed and we have essentially closed. With the prices of fuel, all the eggs are in the charter basket right now. So since we lost our bread and butter contract, we couldn't afford to do scheduled service.
benpopken: Did you find about it before going to work today?
ATAinsider: I did not, but it was on the news, apparently the press release was at 0500.
benpopken: What was the mood like once people started finding out?
ATAinsider: Very sad. It seemed somewhat inevitable, but we all had hopes, you know? People had been there for 25 or more years and the worst part is, their loyalty paid off for nothing in the end. Seems to be the state of affairs anymore.
benpopken: They won't be handing out any gold watches, that's for sure.
ATAinsider: Nope, and the best anyone can hope for is unemployment.

For passengers seeking information on ATA refunds or rebooking, check out this post.

When we got our second mortgage, our home appraised for almost $90k. We listed it several times at $42k (the break even point for us) and couldn't sell it. We relisted at $36k (which would have us in debt without a house) and couldn't sell it. The roof was literally caving in, the basement was flooding and the porch was crumbling.

Most of what the reality agent told us on the disclosure sheets turned out to be false, but we had no real recourse as we found out so long after the closing. One example was the roof was listed on the sheets as "newer", but the original 1910 slate shingles were still on there, topped with four layers of asphalt shingles (the building code allows for three, maximum). We were to naive to not get a home inspection before buying. We were stuck and couldn't afford two residences.

The reason our story is amusing was the bank foreclosed and tried to turn the property on auction quickly. They couldn't sell it either. They put a ton of work into the place. Our roof estimate alone was $14k, plus there were lots of things not up to code in that old place. They ended up selling it on their third attempt, for $19,000. There's no way that would have even covered their costs after we left.

Currently we're renting a friend's condo as we wait for the credit stain of bankruptcy to wane. I'm not sure I'd ever want to invest in real estate again. We were told over and over by family that real estate is the only safe investment, but speculation is just that and we lost our shirts in the process.

-Matt

• Always get a complete home inspection before buying new property.
• Real estate is an investment like any other, it carries risk. Risk means risk of losing all your money.

(Photo: DCvision2006)

Consumer debtors receiving a bankruptcy have to attend various meetings in the building. Also, to get a bankruptcy discharge, they may need a credit card.

Of the debtor's interviewed as part of the Consumer Bankruptcy Project, over 92 percent said they received a credit card offer in the mail afterwards.

The problem is that the only creditors who are going to give someone with a bankruptcy on their record are going to set usurious terms, owing to their bad credit history.

We're all for personal financial responsibility, but to expect a bankruptcy receiver to have the discipline to resist using a bad card smacks of out and out victimization.

Writes Credit Slips, "Should Chapter 7 debtors accept one of the dozens of credit card offers they get in the first month of their bankruptcy or should they walk, bike, snowmobile, etc to the bankruptcy court?"

Bankruptcy Court Tells Debtors To Charge It [Credit Slips]
(Photo: samwilkinson)

In 2005, Congress gave the credit industry what it wanted: tighter bankruptcy laws. In 2006, the credit industry responded by mailing out 8 billion credit card solicitations—up 30% from 2005...

...If debtors have no bankruptcy option, Ronald Mann points out that creditors can keep them in the sweat box longer. Perhaps if bankruptcy were outlawed altogether the mailings would go to 16 billion, and if debtors' prisons were reinstituted, could the mailings top 25 billion? Ah, the possibilities.

It's just business. Emboldened by the knowledge that fewer suckers can jump the line, creditors are more willing to bait the hook. — BEN POPKEN

You Are Pre-Approved—8 Billion Times [Credit Slips]
(Photo: amishsteve)

...rational lenders use sophisticated marketing techniques to exploit consumers' lack of information and imperfect decisionmaking processes and encourage excessive consumer borrowing.

Interesting read, especially if you like words like heuristics bias and anomalous preferences. — BEN POPKEN

The Myth Of the Rational Borrower: Part 1, Part 2 [Credit Slips via Caveat Emptor]

...even if you think they're the only hi-speed internet game in town.