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When an individual contemplates filing for bankruptcy protection, he or she has a few options. One is to file a Chapter 7 case, and another is to file a Chapter 13 case. In a Chapter 7, all of a debtor’s non-exempt assets are transferred to a bankruptcy estate to be liquidated and distributed to creditors. In a Chapter 13, the debtor retains assets and makes payments to creditors according to a court-approved plan. Read More ›
Tags: Chapter 13, Chapter 7, U.S. Supreme Court

Florida Statutes section 440.02 provides for the exemption of worker's compensation claims or benefits due or payable under Florida Statutes, Chapter 440.  Courts have held that this exemption for worker's compensation benefits applies whether the benefits are compensate for lost wages or for present or future medical expenses. This exemption though does not apply to creditors with claims based on child support or alimony.

The Florida Supreme Court held worker's compensation benefits deposited into a bank account remain exempt  "so long as the funds are traceable to the workers' compensation benefits." Broward v. Jacksonville Medical Center, 690 So. 2nd 589 (Fla. 1997).

Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com

By Jessica Silver-Greenberg

Two of the nation’s biggest banks will finally put to rest the zombies of consumer debt — bills that are still alive on credit reports although legally eliminated in bankruptcy — potentially providing relief to more than a million Americans.

Bank of America and JPMorgan Chase have agreed to update borrowers’ credit reports within the next three months to reflect that the debts were extinguished.

The move is a victory for borrowers whose credit reports have been marred as a result of the reported debts, imperiling their job prospects and torpedoing their chances of getting new loans.

The change by the banks emerged this week in Federal Bankruptcy Court in White Plains, where the two banks, along with Citigroup and Synchrony Financial, formerly GE Capital Retail Finance, face lawsuits accusing them of deliberately ignoring bankruptcy discharges to fetch more money when they sell off pools of bad debt to financial firms.

The lawsuits accuse the banks of engineering what amounts to a subtle but ruthless debt collection tactic, effectively holding borrowers’ credit reports hostage, refusing to fix the mistakes unless people pay money for debts that they do not actually owe.

It is not the only pressure. Lawyers with the United States Trustee Program, an arm of the Justice Department, are investigating the banks, said several people briefed on the inquiry, about whether the banks are deliberately flouting federal bankruptcy law.

In an apparent, if oblique, reference to the inquiry, a lawyer for Synchrony Financial told the judge at a hearing this year that the lender was under “investigation” by the Justice Department.

JPMorgan, Synchrony Financial and Bank of America declined to comment for this article.

But the banks have offered defenses in court documents, arguing that they comply with the law and accurately report discharged debts to the credit agencies. Their lawyers have also argued that the banks typically sell off debts to third-party debt buyers and have no stake in recouping payments on the overdue bills. The banks’ practices were the subject of a front-page article in The New York Times.

Without admitting any wrongdoing, lawyers for JPMorgan Chase and Bank of America agreed to ensure that bankruptcies were registered on credit reports. A lawyer for JPMorgan Chase, according to court documents, said that by August the bank would ensure that all debts discharged in Chapter 7 bankruptcy were correctly recorded.

Late last year, Synchrony Financial agreed to provide similar relief, at least on a temporary basis.

Under federal law, once a borrower has erased a debt in bankruptcy, banks are required to update the credit reports to indicate that the debt is no longer owed, and remove any notation of “past due” or “charged off.”

Bank of America promised to go further, agreeing to fundamentally change the way the bank reports all the stale debts that are sold to financial firms. For all credit-card debts sold since May 2007, court records show, the bank will remove any marks on consumers’ credit reports. That way, a lawyer said, “should a previously sold credit card account go through a bankruptcy discharge,” the mark will already be gone.

Together, the decisions could help more than one million Americans.

They are people like Bernadette Gatling, a hospital administrator, who went through bankruptcy to void debts she owed on Chase credit cards. While the process was grueling, she said, she thought it would offer her a second chance.

She was floored in March 2014 when three years after bankruptcy, she found that her credit report was still marred by the seemingly unvanquishable debts.

“I lost job after job because of this,” she said, adding that potential employers would suddenly stop calling once they viewed her credit report.

There has been a fierce battle over the lawsuits, brought by Charles Juntikka, a bankruptcy lawyer in Manhattan, and George F. Carpinello, a partner with Boies, Schiller & Flexner.

Judge Robert D. Drain, who is presiding over the cases, has repeatedly refused the banks’ requests to throw out the lawsuits. In July, when he refused to dismiss the case against JPMorgan, he said, “The complaint sets forth a cause of action that Chase is using the inaccuracy of its credit reporting on a systematic basis to further its business of selling debts and its buyer’s collection of such debt.”

At a hearing in April, transcripts show, the judge criticized Citigroup for not changing the way it reports debts to the credit reporting agencies. “I continue to believe there’s one reason, and one reason only, that Citibank refuses to change its policy,” the judge said. The reason, the judge went on, is “because it makes money off of it.”

In a statement, a spokesman for Citigroup said the bank “takes this issue very seriously,” adding that the bank has made a proposal to the plaintiff’s lawyers “consistent” with what the other banks have proposed.

In the hearing this week, lawyers for Citigroup indicated that they were on the brink of making a change similar to what Bank of America and JPMorgan Chase have agreed to, an alteration that could change the credit reports of tens of thousands of people. For many borrowers, the credit report is the difference between getting a job and being turned down.

With so much at stake, borrowers are willing to do almost anything — even pay debts that they worked hard to discharge in bankruptcy.

Diane Torres, who went through bankruptcy in 2010, said she was on the verge of becoming one of the people who paid for debts she no longer owed. The only thing that stopped her, Ms. Torres said, was that she could not afford it.

The problems began, Ms. Torres said, when she applied for a job with a credit union and was told that her credit report showed she had two delinquent accounts — one on a Chase credit card and the other on a credit card from GE Money Bank. Unless she fixed the problem, Ms. Torres said, she would not get the job.

When she contacted both lenders, Ms. Torres said, she was told that unless she paid, the debts would remain as charged off.

“I felt desperate,” she said. “It was urgent that I pay these debts or else I would not get the job that I really needed.” But after, at the suggestion of her bankruptcy lawyer, she provided the credit union with a record that she had voided the debts in bankruptcy, she got the job.

In the battle between one of America’s largest cities and one of America’s largest banks, the money reigns supreme. At least, that’s what a federal judge in Los Angeles thinks.
On May 15, 2015 A federal judge threw out a lawsuit by the city of Los Angeles that accused Bank of America of discriminatory mortgage lending. The suit, which was originally filed by the city in 2013, claimed that Countrywide Home Loans (a unit of Bank of America) violated the U.S. Fair Housing Act by making loans to minorities on worse terms than those offered to whites and then refused to refinance them on fair terms.
The actions, claimed the city, was a major cause of foreclosures and neighborhood blight in largely minority neighborhoods. In fact, the lawsuit claimed that loans issued by the bank in Los Angeles’s minority neighborhoods were more than four times more likely to result in foreclosure than those issued in white neighborhoods.
U.S. District Judge Percy Anderson, ruling in City of Los Angeles v. Bank of America Corp et al, threw out the lawsuit because Los Angeles lacked standing to sue under the law, which requires proof of a “concrete injury.”
According to Reuters:

Bank of America said in a statement it was pleased with the decision. The bank said it responded “with urgency” to rising mortgage defaults caused by the economic downturn in the United States.
The city’s lawsuit sought damages for lost property tax revenue and increased costs of municipal services in neighborhoods hit by foreclosures.
A spokesman and lawyers for the city could not immediately be reached for comment.

The lawsuit was one of a number of actions filed by Los Angeles against various banks over mortgages lending practices before the 2007 housing collapse. The city lost tens of millions of dollars in property tax revenue and incurred huge costs in maintaining public services at a time when the mortgage market went down the drain.
Sadly, the U.S. Fair Housing Act isn’t going to be the way for cities such as Los Angeles to be compensated for the havoc brought on by lenders in pursuit of the almighty dollar. Judge Anderson held that a municipality couldn’t be considered an “aggrieved person” under the US Fair Housing Act.
A corporation is considered a person under the U.S. Supreme Court’s decision in Citizens United v. Federal Election Commission but a municipality isn’t. I guess it just depends which side is argued by the big money.

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