Searching for debt relief in California is no easy matter, especially for construction companies. When things go bad, usually there are pending jobs and unfinished projects. With homeowners clamoring to be given priority and have work completed, the pressures on the owners of a failing business are immense. Sometimes there simply isn't enough money to keep the ship afloat. Bankruptcy can offer some measure of debt relief to a businessman who needs a breath of fresh air and a pause to figure out how to resolve financial problems.

A construction company based in Castro Valley, faced with mounting debt, filed for bankruptcy protection in June. More recently, the company president filed for personal bankruptcy protection. Both appear to have been smart moves, despite leaving a number of homeowners upset and angry.

The filings automatically halt pending litigation, prevent the filing of new lawsuits, and generally offer temporary debt relief until a bankruptcy court can decide the matter.

The company is facing allegations that homeowners' signatures on insurance checks for payment of construction work were forged. Other checks apparently required not only the signature of the homeowner, but also that of the lending institution holding the mortgage on the property. Homeowners claim these checks were cashed without the endorsement of the mortgage holder.

Clearly if checks were forged, criminal charges may be forthcoming and those debts would most likely not be discharged in bankruptcy. Also, if banks cashed checks with the required endorsements, they may face liability for acting negligently.

One purpose of bankruptcy is to provide immediate debt relief so as to allow a full financial investigation. A meeting of creditors will be arranged, at which time homeowners and others owed money may voice their complaints and objections. Bankruptcy law can be confusing and intimidating to many. It is, however, an important safeguard for a California business that is no longer solvent. An attorney knowledgeable in bankruptcy and debt relief may be of help.

Source: ABC7 NEWS, "Vanderbuilt Construction files for bankruptcy," Heather Ishimaru, July 20, 2011