The U.S. Postal Service, or USPS for short, provides a vital service to Americans at a relatively low cost. Despite the fact that stamp prices generally increase every few years, the cost of mailing a letter is still small when you consider the costs of delivering it. The USPS was previously able to remain profitable because of the sheer volume of mail that it delivered. However, nowadays mail volume is down significantly and the Postal Service is strapped for cash.

Other mailing options, such as Parcel Post for packages, have rates that vary depending on how far the package is delivered from its origin. In contrast, a first-class letter can be mailed for the same price regardless of where in the United States it is going. For example, letters can be mailed to the far reaches of Alaska or to rural homes at the end of dirt roads, all for 44 cents. And mailing a postcard is even cheaper. Think how much it would cost you if you had to deliver such mail yourself. Perhaps this is the reason that commercial mailing services such as FedEx and UPS tend to have competitive rates for packages and large envelopes but not for letters or postcards.

So, if the USPS has no real competitors for delivering letters and postcards, why is the Postal Service suffering so much? The main answer is that the volume of mail has decreased drastically. The primary reason for this is the rise of e-mail and online accounts such as online banking. When a customer signs up for paperless bank statements, the bank no longer has to spend postage mailing that person monthly statements. When you want to write a note to your friend, you most likely use e-mail much more often than physical mail.

A secondary but significant reason for the decline in mail volume is the recession. Before the credit crunch, many people were being bombarded with credit card offers and the like. That is no longer as prevalent. In addition, as businesses cut their workforces, they now have fewer employees to whom they have to mail items such as W-2s. Declining business operations also mean less mail. For example, if a vendor gets hired by 100 buyers instead of 150 buyers, that vendor will mail 100 contracts instead of 150 contracts. When the work has been completed, the vendor will mail 100 bills rather than 150 bills. Multiply this by the number of companies that are not doing as much business as they usually do and it is easy to see how the USPS is being hit harder than many private businesses are.

Joint restaurant company Perkins & Marie Callender’s, along with eleven of its subsidiaries, filed for Chapter 11 bankruptcy on June 13, 2011 in the United States Bankruptcy Court for the District of Delaware. While Perkins and Marie Callender’s operate as independent restaurant chains, they are owned by the same parent company. The company, which runs 76 Perkins restaurants in MN, claimed $290 million in assets and $441 million in debt. The company’s loan default began when it missed an interest payment of $9.5 million on April 1.

Originally, the two companies were separate, with Marie Callender’s opening in 1948 and Perkins Restaurants opening ten years later. Five years ago, the two restaurant companies were merged. The joint company now has hundreds of Perkins restaurants in the U.S. and Canada, along with dozens of Marie Callender’s restaurants in America and Mexico. In addition, it owns baked goods manufacturer Foxtail Foods, which produces dessert items for the company’s locations and also sells its products to other restaurants.

A spokesperson for Perkins attributed the company’s financial ruin to the declining economy. Both restaurant chains are concentrated in areas suffering the most from the real estate crash. More specifically, Perkins has a strong presence in California, Nevada and Florida, while Marie Callender’s is concentrated in the Southwest and California. Having a disproportionately large number of locations in financially distressed states meant that its customers were unable to continue their pre-recession levels of patronage. This in turn caused the company to lack the requisite amount of capital to improve its restaurants or open new locations, which led it to be out-competed by other chains.

As part of its Chapter 11 restructuring, 65 Perkins and Marie Callender’s restaurants (only one of which, the 6023 Nicollet Avenue, Minneapolis branch, is located in Minnesota) will be closed. This amounts to laying off approximately one fifth of the company’s workforce. The company will continue to operate the rest of its locations using its remaining assets in addition to $21 million in financing from Wells Fargo. The restructuring will also require the company to draft a plan of reorganization by July 14. The restructuring is scheduled to be finished by October 21 of this year. After the restructuring process has been completed, most of the company will be controlled by private investment funds under the auspices of the Minnesota-based firm Wayzata Investment Partners.

Automobile giant Chrysler has paid back the billions of dollars that were loaned to it during the economic bailout of 2009. The bailout money, with interest, amounts to approximately $7 billion, most of which came from the American government and the remainder of which came from the Canadian government. Chrysler, however, has not yet repaid the almost $4 billion loaned to it by the U.S. federal government shortly before the bailout. Still, Chrysler’s complete repayment of its bailout loan has sparked much conversation about economic bailouts.

Many Democrats are using Chrysler’s milestone repayment as evidence that the bailout is a sound economic policy that should remain on the table for future recessions. They note that Detroit’s economy would have been much worse off had Chrysler not rebounded from its financial woes. Moreover, Chrysler was able to repay its bailout loan six years earlier than anticipated, which would indicate that the bailout may have jumpstarted the company’s recovery.

Many Republicans, in contrast, argue that future bailouts should be avoided in order to protect taxpayers. For example, even after taking into account the interest paid to the U.S. government and the anticipated revenue from the government’s selling its final 6.6 percent ownership of the company, Chrysler’s repayment is still not sufficient to fully repay taxpayers for their earlier loans to the struggling company. Moreover, even if Chrysler does pay back its earlier loans, that would still not account for all of the money given to the company in the form of subsidies.

In addition, some Republicans argue that future bailouts should be avoided in order to preserve the American capitalist system, which relies on competition, survival of the fittest and separation between the government and the private sector. If failing companies are constantly being bailed out by the government, competition in the free market will no longer control which companies succeed and which companies fail.

On a related note, some pundits argue that Chrysler is back on its financial feet because of its 2009 bankruptcy and restructuring, as opposed to the bailout itself. By going bankrupt, Chrysler was able to avoid paying back some of its debts. Bankruptcy, in effect, allowed the company to pay back the debts that it could and then “reset” its accounts to zero dollars as opposed to carrying forward a negative balance from its remaining unpaid debts. This avoidance helped the company to swing back from red to black (i.e. owing money to making money) much more quickly than it would have been able to absent declaring bankruptcy.

With the economy still making a comeback from the recent recession, now is not an easy time to raise capital for a new business. However, with a higher than average unemployment rate and a very competitive job market, more and more people are starting their own businesses as a way to make money.

According to a recent article by John Welbes, over twenty states have enacted so-called angel tax credits in order to encourage venture capitalists, the “angels” that allow new businesses to get off the ground financially, to invest. Minnesota’s version of the credit was enacted last year and provides individuals with a 25 percent credit on money that they invest in startup companies. According to figures provided by the Minn. Department of Employment and Economic Development, the maximum credit is $125,000 per person per year. An additional limitation is that any given company can only raise up to $2 million from private investors. So far, only one company in Minnesota has reached this maximum.

Investors seeking to take advantage of the credit must be certified with the appropriate state’s angel tax credit program. Currently, only 136 investors are certified in MN for 2011 but there is still plenty of time left to register with the program. Minnesota’s angel tax credit is not set to expire until 2014. Furthermore, there is certainly enough funding for the tax credit to accommodate more investors. Last year, approximately $7 million in angel tax credits were given out in Minnesota, compared to the almost $16 million available for this year.

As of the end of February, the angel tax credit helped 67 companies in Minnesota to raise $28 million. The fact that half of the angel tax credits for the 2010 tax year were requested in December suggests that investors were in fact lured into investing by the tax credit. As each tax year comes to a close, many investors do preliminary tax calculations. If their tax liability is too high, they will often try to offset it with additional tax credits.

Economic statistics show that unfortunately only 47 jobs were created last year as a result of Minnesota’s angel tax credit. This corresponds to a whopping cost of $149,000 per job created. Thus, it would literally have been cheaper for the government to have given those 47 people their new salaries than to have given out the tax credits that created their jobs. However, Bob Isaacson, who runs the business finance office of the MN Department of Employment and Economic Development, commented that startups typically do not hire very many employees in the initial stages of business. It is only when their revenues pick up enough to accommodate paying for more salaries that those companies increase their hiring. Thus, the angel tax credit is likely to result in even more jobs in the coming years and is therefore more of a long-term investment in Minnesota’s entrepreneurship.

As reported in a recent Finance and Commerce article by Scott Carlson, the Parkway Hardware store in Minneapolis closed last month.  Parkway had been in operation for nearly a decade at its 4748 Chicago Ave. S. location.  The business was originally started by Joel and Winni Christopherson in 2001 and was then sold to Chris Geiger in 2007.  Shortly after purchasing the store, Geiger reorganized the layout and added additional merchandise and rental equipment.  Unfortunately for Geiger, the recession hit shortly after his renovations.

Experts estimate that between 100 and 200 independent hardware stores have closed across the country since 2007 because of the recession and the growth of larger hardware chains like Lowe’s and Home Depot.  Financial pressures have led an increasing number of people to choose the lowest prices, which are almost always found in bigger chain hardware stores because of the bulk discounts that those stores are able to get on their merchandise.  Previously, many patrons did not mind paying the slightly higher prices that small “mom-and-pop shops” tend to have in exchange for factors such as more convenient locations, shorter lines, more knowledgeable employees and better customer service.  But with many Americans trying to squeeze the most out of every last dollar, larger hardware stores now have a definite competitive advantage.  As a result, stores such as Parkway Hardware and Restoration Hardware (a small chain) are suffering.  Restoration Hardware has been forced to close some of its stores, including its Grand Avenue location in St. Paul, MN.

Many Minneapolis residents are saddened by the closing of Parkway Hardware.  It had been a convenient source of assorted merchandise and rental equipment.  As a result, it drew a fair amount of business to the area, albeit not enough business to stay afloat in the current economic climate.  Because Parkway had been located in the Chicago Avenue shopping district, its customers provided shopping traffic to nearby businesses as well.  Harvey McLain, the owner of the building in which Parkway had been located, hopes that the next store to occupy Parkway’s old location will bring customers to other area businesses just as Parkway had.

According to a recent article appearing in the Star Tribune, Meridian Behavioral Health Network filed for Chapter 11 bankruptcy on February 28.  Meridian is the largest behavioral health care company in Minnesota, excluding non-profit organizations.  The company, which is headquartered in New Brighton, MN just outside of the Twin Cities, operates fifteen behavioral health facilities in addition to providing related services at three prisons.  The Minnesota Department of Human Services, the state agency in charge of licensing facilities like Meridian, does not plan to investigate the company as a result of its recent bankruptcy proceedings unless the bankruptcy begins to have negative effects on patients care.

Meridian avers that it was doing well financially, but apparently suffered from its close association with MK Network, a Connecticut-based medical services company.  In its bankruptcy filings, Meridian contends that its health care centers are 90 percent full and that all of its vendors and its 220 employees are being paid on schedule.  In contrast, MK began to default on its loan in September and has missed other payments since then as well.

Together, Meridian and MK owe the companies’ main lender, Fifth Street Finance Corporation of New York, over $20 million, with Meridian being responsible for almost $5 million of that amount.  As in most secured lending, the terms of the loan give Fifth Street Finance the right to seize the companies’ assets in the event of a default.  While few lenders actually exercise that option, Fifth Street Finance did in fact seize Meridian’s bank accounts in late February, thereby putting the financial brakes on Meridian’s and MK’s business operations.  This seizure means that the companies’ banks are no longer allowed to process checks or transfers from the companies’ bank accounts.

In discussing Meridian’s bankruptcy, company spokesperson Lisa Michie accused Fifth Street Finance of being “an aggressive ‘loan to own’ outfit,” according to Crosby’s Star Tribune article.  The term “loan to own” refers to lenders that finance commercial endeavors at inflated interest rates in the hopes that their borrowers will default on the loans.  During the credit crunch — when traditional bank-financed loans were not easily available — borrowers were more likely to resort to alternative lenders like Fifth Street Finance, even if their interest rates were higher than bank rates.  It is not clear at this time whether Michie’s characterization of Fifth Street Finance is a fair one.

Aperitif, a Mediterranean restaurant in Woodbury, closed last Monday after being open for business for slightly over one year.  According to a Saint Paul Pioneer Press article by John Welbes, Aperitif was owned by Saint Paul real estate mogul Jerry Trooien, who is currently in the midst of bankruptcy proceedings.  Despite sales of over $2 million last year, Aperitif reported a net loss of $217,000 in 2010.  Including development costs, the restaurant suffered an actual net loss of $505,700.

According to Washington County officials, Trooien’s companies are behind on their taxes by approximately $2.6 million.  This amount stems from property taxes owed on Aperitif and four other properties.  According to Trooien’s bankruptcy filings, the value of his many assets does not even come close to the sum of his liabilities; his assets are reportedly worth $6.5 million, while his debts total $284.5 million.

Trooien filed for Chapter 11 bankruptcy reorganization last year.  According to an article by Jim Hammerand appearing in the Minneapolis/Saint Paul Business Journal, the trustee of the case recommended that it be converted into a Chapter 7 bankruptcy, which involves liquidation (i.e. forced sale) of the debtor’s non-exempt assets.

Shortly before news of Aperitif’s closing was publicized, Trooien’s offices were raided by the FBI because one of Trooien’s development companies, JLT Group Inc., is under investigation for mortgage fraud.  The charges relate to JLT Group’s condominium complex in Minnetonka.  According to Trooien, he was not aware that the fraudulent practices were taking place.

JLT Group also owns the Sheraton Hotel adjacent to Aperitif.  According to Trooien’s bankruptcy documents, the hotel reported a net loss of $1.7 million in 2009 and $1.3 million in 2010.  Unlike Aperitif, however, the Sheraton Hotel is not arrears in its property taxes and does not plan to close its doors.

Despite perhaps being the Donald Trump of Minnesota, Trooien is better known for a potential project that never came to fruition: the Bridges of Saint Paul complex would have cost $1.5 billion and would have been composed of a hotel, a variety of stores and 1,150 houses.

According to The Mortgage Bankers Association, mortgage applications rose 2.7 percent last week as more borrowers took advantage of the lowest rates in decades to reduce their monthly loan payments. Furthermore, refinancing is at its highest level since May 2009 and makes up almost 83 percent of all new loans, its highest share since January 2009.

At the same time home sales are down mostly due to buyers hesitate to purchase due to job insecurity. Also, expiration of the federal tax credits has added to the slow down.

The average rate for a 30-year fixed loan fell to 4.43 percent from 4.55 percent a week earlier. Rates on the 15-year fixed-rate mortgage, a common refinancing option, decreased to 3.88 percent from 3.91 percent.

Those of you that can, should take advantage of today’s historic low rates and refinance your mortgage.  Be sure to compare rates and closing costs before committing to a lender. Also, consider a 15 year mortgage over a 30 year mortgage to save thousands of dollars in interest over the term of the loan.

Rapper Young Buck filed for bankruptcy shortly after an US Federal Agents raided his home in Hendersonville, TN.

The Tennessean newspaper reports that a judge has accepted the rapper’s proposal to dock his monthly pay from Cashville Records by $12,500 over 60 months for a total of $750,000.

David Darnell Brown, who is better known by his stage name Young Buck, could save a large portion of the $164,000 in property the IRS seized August 2. The IRS says he owes the agency more than $300,000.

Chapter 13 filing allows a repayment plan for creditors to recover part of what they are owed as opposed to a debt discharge.  Some creditors in Brown’s case include the state of New York, American Home Mortgage Service and Wells Fargo Auto Insurance.

Brown commented on the matter, saying how he needed to be more personally involved in his financial affairs.  “This IRS situation came about because I trusted <others> to handle my business for me while I focused on making music. From now on, I am going to stay on top of my own business.”

Young Buck’s albums include “Straight Outta Ca$hville” and “Buck the World”, and is a former member of the New York City hip hop group G-Unit.

During the second quarter of 2009 consumer bankruptcy filings in the District of Minnesota continued to increase steadily at 35.7 percent compared to the same period in 2008, according to the U.S. Bankruptcy Court.  The District of Minnesota includes Minneapolis, St. Paul, Duluth and Fergus Falls.  Nationwide, consumer bankruptcy filings increased 37 percent, according to the American Bankruptcy Institute.

We seem to be over the worst as far as home foreclosures are concerned.  They peaked in the second quarter of 2008.  However, the unemployment rate has continued to rise — 8.2 percent at end of May compared to 5.3 percent in 2008 — which explains why bankruptcies continue to rise both locally and nationally.

Tight credit is also affecting those facing financial hardships.  In the past, people experiencing a loss of income could rely on credit to carry them over until they found new employment.

Today even those with good credit scores are seeing their credit limits lowered.  A critical first step in this economy is to have an emergency fund set aside to cover you in the event you suffer a period of unemployment.

Although the Federal Government has extended unemployment benefits to up to 59 weeks in states hardest hit by unemployment, the maximum weekly benefit of just over $500 is typically not sufficient to support an average family in the Minnesota region.

Unfortunately, up to this latest recession we’ve been a culture of spenders, not savers.  Most people who have lost their jobs didn’t have much of an emergency fund to carry them over for long.

Even if we’d been great savers, however, few families would have been able to set enough aside to cover them in this difficult job market.  While bankruptcy is a last resort for people, it does offer them a chance for a fresh start.