Topics:
Bankruptcy
Chapter 13
Means Test
Legal Research
"The very first case argued today, the opening day of the 2010 Supreme Court term, was Ransom v. MBNA. Ransom presents an issue at the heart of the bankruptcy means test. The question for the Court is whether an above-median-income debtor in chapter 13 who does not currently have a car payment can take the IRS allowance for vehicle “ownership expense” as part of the means test. This issue also arises in chapter 7. You can find the transcript of the oral argument here. http://bit.ly/ransom_oral_arg" ...more...
Topics:
Bankruptcy
Chapter 13
Financial Crisis
Financial Planning
Foreclosure
"As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.
When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve." ...more...
Topics:
Bankruptcy
Financial Planning
Financial Crisis
Foreclosure
Chapter 13
Exemptions
"Lenders wrote off as uncollectible $11.1 billion in home equity loans and $19.9 billion in lines of credit in 2009." ...more...
Topics:
Bankruptcy
Financial Crisis
Legislation
Chapter 13
"A long recession and a slow recovery have combined to force more Minnesotans to turn to the bankruptcy system." ...more...
Topics:
Foreclosure
Bankruptcy
Chapter 13
Financial Crisis
"Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population." ...more...
Topics:
Bankruptcy
Foreclosure
Chapter 13
"The settlement requires reimbursement to consumers who were overcharged. BOA, in addition to agreeing not to lie, steal, or file documents without reviewing them, will also have to follow notice procedures similar to those that are already required or are likely to be required for all mortgage companies once new Bankruptcy Rule 3002.1 becomes effective in December, 2011. The United States Trustee (UST) Program assisted the FTC in its efforts. This settlement is the first significant positive result of increased UST scrutiny of mortgage lenders, although the extent of the UST’s participation is not known." ...more...
Topics:
Chapter 13
Bankruptcy
Debt Collection
Credit Cards
Financial Crisis
Financial Planning
Foreclosure
Legislation
"Debt settlement companies offer help to individuals in financial turmoil. Peter S. Goodman reports on the growing criticism the industry has inspired." ...more...
Topics:
Bankruptcy
Chapter 13
Debt Collection
Foreclosure
Legislation
Financial Crisis
"Countrywide, now a unit of Bank of America, was once led by Angelo Mozilo and was the nation’s largest mortgage lender in the glorious, pre-crisis days of the housing boom. But it was also a predatory institution, and the F.T.C., citing Countrywide’s serial abuse of troubled borrowers, extracted a $108 million fine from Bank of America last week.
That money will go back to some 200,000 customers whom Countrywide forced to pay outsized fees for foreclosure services. These included billing a borrower $300 to have a property’s lawn mowed and levying $2,500 in trustees’ fees on another borrower, when the going rate for that service was about $600.
Though Countrywide’s mortgage contracts specifically barred such practices, they served the company well by generating income during downturns when it was harder to keep making money off new mortgages. This “counter-cyclical diversification strategy,” as Countrywide called it, was designed to “extract the last dollar out of the pockets of the most desperate consumers,” said Jon Leibowitz, the F.T.C. chairman." ...more...
Topics:
Bankruptcy
Foreclosure
Legislation
Financial Crisis
Chapter 13
"The F.T.C. and the United States Trustee Program, which enforces federal bankruptcy laws for the Justice Department, said that in numerous instances Countrywide misled customers or bankruptcy court officials.
The fees, which were billed as the cost of services like property inspections and lawn mowing, were grossly inflated as Countrywide created new subsidiaries to hire vendors to supply the services, allowing the company to increase fees in the process, the commission said.
The F.T.C. has not yet established how much will be paid to each consumer, in part, Mr. Leibowitz said, because Countryside’s record keeping was “abysmal.” The $108 million settlement represents the F.T.C.’s estimate of consumer losses, but does not include a penalty, which the commission is not allowed to impose." ...more...
Topics:
Bankruptcy
Chapter 13
Credit Cards
Financial Crisis
Legislation
Legal Research
"The Supreme Court has just issued its opinion in Hamilton v. Lanning, a case interpreting the "means test" that the 2005 bankruptcy amendments added to chapter 13. The issue was chapter 13's requirement that the debtor commit his or her "projected disposable income" to a plan, and whether projected disposable income should be determined in a mechanical way (based on the debtor's income for the past six months as defined in the means test) or whether projected disposable income should include reliance on some estimate of the debtor's income in the future during the plan period. The Supreme Court rejected the mechanical approach, which was argued for by the debtor trustee and the National Association of Consumer Bankruptcy Attorneys, and adopted the forward-looking approach. The decision, authored by Justice Alito, was 8-1, with a dissent by Justice Scalia arguing the plain meaning of the text supported the mechanical approach." ...more...
Topics:
Bankruptcy
Financial Crisis
Chapter 13
"The rate of increase across the entire nation was 10%. There are 29 judicial districts that saw a rate of increase greater than 10%. Those judicial districts fall principally in three areas: the plains and west coast, the upper Midwest, and the northeast. Thus, the national statistics do mask a great deal of regional variation." ...more...
Topics:
Foreclosure
Bankruptcy
Financial Planning
Legislation
Financial Crisis
Chapter 13
"The Obama administration on Friday announced broad initiatives to provide more assistance to homeowners who are behind on their mortgage or owe more than their house is worth." ...more...
Topics:
Legislation
Foreclosure
Financial Planning
Chapter 13
"The adjustments announced today are tailored to accomplish these goals by helping a targeted group of borrowers.
Eligible homeowners for modifications under HAMP must, for example: live in an owner occupied principal residence, have a mortgage balance less than $729,750, owe monthly mortgage payments that are not affordable (greater than 31 percent of their income) and demonstrate a financial hardship. The new flexibilities for the modification initiative announced today continue to target this group of homeowners.
The FHA refinance options being announced today will provide more opportunities for lenders to restructure loans for some families who owe more than their home is worth. This is a voluntary program for lenders and homeowners. The population eligible for a FHA refinance must be current on their mortgage. This rewards responsible homeowners and creates stabilizing incentives in the housing market." ...more...
Topics:
Bankruptcy
Foreclosure
Financial Crisis
Financial Planning
Chapter 13
"Bank of America said on Wednesday that it would begin forgiving some mortgage debt in an effort to keep distressed borrowers from losing their homes." ...more...
Topics:
Bankruptcy
Chapter 13
Legislation
Financial Planning
Financial Crisis
Foreclosure
"Under a sensible bankruptcy system, households in severe financial distress ought to be able to discharge their debts if they are willing to do two simple things: turn over all assets and make payments out of future income, to the extent that either exceeds a low and nationally uniform threshold. If debtors wanted to keep assets against which they have borrowed, they should have to pay the fair value of the assets, but nothing more.
A rational bankruptcy system would also scrap the separate chapters altogether, along with the complicated paperwork now required to document and justify the chapter choice in each particular case. There would be simple, separate tracks automatically determined by each family’s financial position. Families with no substantial income or assets — the great majority of bankrupt households — should face a process as simple as filing a 1040EZ tax form." ...more...
Topics:
Legislation
Debt Collection
Bankruptcy
Chapter 13
Legal Research
Means Test
Financial Planning
"This part is bad for the attorneys:
“Attorneys who provide bankruptcy assistance to assisted persons are debt relief agencies under the BAPCPA. By definition, “bankruptcy assistance” includes several services commonly performed by attorneys, e.g., providing “advice, counsel, [or] document preparation,” §101(4A). Moreover, in enumerating specific exceptions to the debt-relief-agency definition, Congress indicated no intent to exclude attorneys. See §§101(12A)(A)–(E). Milavetz relies on the fact that §101(12A) does not expressly include attorneys in advocating a narrower understanding.”
And this part is bad for the debtors:
“Section 526(a)(4) prohibits a debt relief agency only from advising a debtor to incur more debt because the debtor is filing for bankruptcy, rather than for a valid purpose. The statute’s language, together with its purpose, makes a narrow reading of §526(a)(4) the natural one. Conrad, Rubin & Lesser v. Pender, 289 U. S. 472, supports this conclusion. The Court in that case read now-repealed §96(d), which authorized reexamination of a debtor’s attorney’s fees payment “in contemplation of the filing of a petition,” to require that the portended bankruptcy have “induce[d]” the transfer at issue, id., at 477, understanding inducement to engender suspicion of abuse. The Court identified the “controlling question” as “whether the thought of bankruptcy was the impelling cause of the transaction,” ibid. Given the substantial similarities between §§96(d) and 526(a)(4), the controlling question under the latter is likewise whether the impelling reason for “advis[ing] an assisted person . . . to incur more debt” was the prospect of filing for bankruptcy. In prac- tice, advice impelled by the prospect of filing will generally consist of advice to “load up” on debt with the expectation of obtaining its discharge. The statutory context supports the conclusion that §526(a)(4)’s prohibition primarily targets this type of conduct.”" ...more...
Topics:
Bankruptcy
Chapter 13
Student Loans
"Student loans are a way of life in America, and the federal government guarantees most of those loans. The question now before the Supreme Court is what the obligations of the lender and the borrower are when a student can't pay." ...more...
Topics:
Foreclosure
Financial Crisis
Bankruptcy
Financial Planning
Chapter 13
"A recent study suggests that most homeowners have qualms about abandoning a mortgage that they can afford to pay, even if it straps them to an investment that’s unlikely to pay off anytime soon
But if the house has lost significant value, or if many neighbors walk away from their mortgages, the study says, “strategic defaults” are significantly more likely.
It is an increasingly common question facing homeowners, many of whom have seen their properties lose large amounts of equity in recent years: would you give up a home that is considered to be “underwater” even if you could still afford the monthly payments?" ...more...
Topics:
Bankruptcy
Financial Planning
Chapter 13
Legislation
"A committee in the U.S. House of Representatives was expected to move forward this week with legislation that would create a new regulator, the Consumer Financial Protection Agency (CFPA), which could supplant the Federal Trade Commission as the primary regulator for collection firms.
A bill currently before the House Financial Services Committee, H.R. 3126, would also take regulatory powers from the Federal Reserve and other agencies and place it in the hands of independent regulators who would oversee products such as credit cards and other financial services. As such, the CFPA would oversee the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA)." ...more...
Topics:
Means Test
Bankruptcy
Chapter 13
Legal Research
"On October 5th, 2009, the Ninth Circuit Bankruptcy Appellate Panel (BAP) published its decision in In re Martinez, wherein it concluded that debtors who strip junior liens off mortgages are not entitled to deduct those payments from the chapter 13 projected disposable income test. While the decision was ordered published, the 3 judge panel disagreed with each other in a 2-1 split decision. Unfortunately, it also technically comprised three seperate appeals, yet all of which were entirely unopposed by the debtors with only the Chatper 13 Trustee arguing the appeal in favor of eliminating the deduction." ...more...
Topics:
Bankruptcy
Foreclosure
Chapter 13
Legislation
"Cramdown is back.
House Financial Services Committee Chairman Barney Frank (D-Mass.) tells the Huffington Post he plans to revive the effort to give bankruptcy judges the authority to renegotiate home mortgages -- by making it part of this fall's much-anticipated financial regulatory reform bill" ...more...
Topics:
Bankruptcy
Credit Cards
Chapter 13
"according to data from the 2007 Consumer Bankruptcy Project, the mean credit card debt for bankruptcy filers is $23,543, with a median of $13,279. Among chapter 7 filers, the mean credit card debt was $26,267 and the median $17,032. For chapter 13, those numbers were $18,076 and $6,079, respectively. This actually seems fairly modest when you consider that, by the end of 2008, the average accredit-card balance was $8,329, more than a quarter the average bankruptcy total of $23,543. In addition, 7.9% of our chapter 7 filers and 18.2% of those in chapter 13 reported no credit card debt at all. In the general population, 53.9% of Americans held no credit card debt – a much larger difference." ...more...
Topics:
Bankruptcy
Chapter 13
Means Test
"With Nowlin, the 5th Circuit joined the 8th and 10th Circuits in ruling that §1325(b)(2)'s definition of "disposable income" is a starting point for calculating the disposable-income figure, and that changes in a debtor's income should be taken into account.
"We join the Eighth and the Tenth Circuits in adopting a forward-looking interpretation of 'projected disposable income' in §1325(b)(1). It accounts for the relevant statutory language, including the phrases 'to be received in the applicable commitment period,' 'as of the effective date of the plan,' and 'will be applied to make payments,'" wrote 5th Circuit Judge Jennifer Elrod in an opinion joined by Judges Carolyn Dineen King and James Dennis." ...more...
Topics:
Bankruptcy
Chapter 13
Legal Research
"Bankruptcy holds traps for the unwary. There is always a learning curve for attorneys to know the written rules and the unwritten rules of practicing bankruptcy. The bankruptcy court and bar are supportive of their fellow practitioners and provide assistance and opportunities for education and sharing of ideas. If you are new to bankruptcy practice, take advantage of that assistance." ...more...
Topics:
Bankruptcy
Foreclosure
Financial Crisis
Chapter 13
Financial Planning
"To most people, bankruptcy is a four-letter word. But when all else fails, declaring bankruptcy can be an honest and time-tested legal maneuver to save your house from foreclosure.
If nothing else, filing for bankruptcy protection will buy you some breathing room, which is particularly important in "non-judicial" states where the clock on foreclosure starts as soon as your lender posts a notice that it intends to accelerate your note." ...more...
Topics:
Bankruptcy
Student Loans
Chapter 13
"Issue: When a confirmed chapter 13 plan is completed and the discharge injunction is entered, is the unpaid portion of the student loan discharged when the lender received actual notice of its treatment in the plan and did not object?
Holding: Yes, the discharge injunction may be set aside only pursuant to FRCP60(b) and then based on a lack of sufficient notice." ...more...