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Being overwhelmed with financial debt can sometimes lead you to choose bankruptcy as a last resort. It can be a great tool for debt relief, but filing for bankruptcy is a serious decision that you have to think through. The bankruptcy filing has certain advantages and disadvantages, and it is up to you to weigh the pros and cons between filing and not filing.
In simple terms, a bankruptcy filing is a legal way for individuals dealing with unmanageable debts to get a fresh start. Once you filed a bankruptcy petition, you’ll have the option to clear certain debts and to get a fresh financial start by either temporarily or permanently preventing lenders and debt collectors from collecting payment for your debts. When filing bankruptcy, a bankruptcy court will look into your living expenses, monthly income, and the types of debt you owe to your creditors to determine which type of bankruptcy best suits your needs. To do this, a bankruptcy means test is conducted.
A bankruptcy means test also determines whether you can wipe out your debt through Chapter 7 bankruptcy, or get a debt repayment plan through a Chapter 13 bankruptcy.
Bankruptcy cases usually involve both non-dischargeable and dischargeable debts. Some examples of dischargeable debts are unsecured debts (not backed by any underlying assets) like medical bills, credit card bills, and utility bills. On the other hand, non-dischargeable debts, are secured debts (backed by collateral), alimony and child support, student loans, and tax debts.
Once you filed a bankruptcy, you will either receive a) debt discharge, b) a court order relieving you of duty to repay certain debts, c) a loan repayment plan, or d) a debt settlement. Before filing, it is best to seek the advice of a bankruptcy attorney in Portland to help you determine the best type of bankruptcy that is most suitable for you.
There are different types of bankruptcy chapters, and the most common are Chapter 13 and Chapter 7. When filing Chapter 7, your case will be evaluated by a bankruptcy trustee who will also oversee the selling of your nonexempt assets, where the proceeds will be used to repay or partially pay off your debts.
In Chapter 13, you’ll have the option to keep your estate and assets as long as you can pay your creditors. Also known as a wage earner’s plan, it enables debtors with regular income to come up with a plan to repay all or some of their debts in 3-5 years. Filing bankruptcy under this chapter will also allow you to stop wage garnishments, foreclosure, or property repossession.
To file for bankruptcy gives you the option to get out of debt or to relieve some of the financial burdens of dealing with debts. However, it is also important to note that while it has advantages, there are also disadvantages that come with a bankruptcy filing. Before deciding whether to file for bankruptcy or not, it is best to seek the advice of a bankruptcy attorney who can guide you in the ins and outs of bankruptcy laws. They can assist you in filling out the bankruptcy forms needed in your bankruptcy petition, and guide you throughout your application up to the bankruptcy proceeding in court.
Advantages of Filing Bankruptcy
Once you declare bankruptcy, an automatic stay is immediately put in place. It is an automatic injunction that halts actions by debt collectors, government entities, or individuals to collect debts from a debtor who has declared bankruptcy (with certain exceptions). It can protect you from creditor harassment, and they won’t be allowed to contact you and ask you to pay your debts.
Declaring bankruptcy can also give you a bankruptcy discharge, which means that you won’t be required to pay off certain debts, depending on which type of bankruptcy you’ll file. It can also give you a fresh start in building your financial future by giving you debt relief.
Disadvantages of Filing Bankruptcy?
Although a great management tool, a filed bankruptcy will stay on your credit report for 7-10 years, limiting your chances of getting credit, buying a house, applying for insurance policies, and sometimes, even getting a job.
It also can’t eliminate all your debts like mortgage payment, government tax, some student loan debts, alimony, and child support. You may also lose some nonexempt assets if a judge deems it necessary for you to sell them to pay your debts.
How a Portland Bankruptcy Attorney Can Help
Understanding the basics of bankruptcy law is important especially if you’re considering filing for bankruptcy. Bankruptcy proceedings are complicated, and require the legal assistance of an experienced bankruptcy attorney.
If you are considering filing for bankruptcy, we are here to help. Reach out to our Portland bankruptcy attorneys at Northwest Debt Relief Law Firm to discuss your situation.
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The post Advantages and Disadvantages of Filing Bankruptcy appeared first on Vancouver Bankruptcy Attorney | Northwest Debt Relief Law Firm.
Filing for bankruptcy in Washington or Oregon is a means to give yourself a fresh start after being overwhelmed by unmanageable debt. Many people think that debtors who filed for bankruptcy will have a hard time rebuilding their credit, especially people with bad credit scores even before filing bankruptcy. However, there are ways to increase your credit score despite having a bad credit history. In this article, you’ll learn how to improve and rebuild your credit wisely.
While it is true that a bankruptcy stays on your credit report for up to 10 years, improving your credit score is not impossible. Its effect on your credit standing lessens over time, and it is also more likely that you already have bad credit even before your bankruptcy filing. Also, your credit score after bankruptcy may not be as bad as you think; your credit scores may even be higher a year or two after bankruptcy than before filing. Connect with a bankruptcy attorney in Washington & Oregon to know how you can repair your credit after a bankruptcy.
So whether you filed a Chapter 7 or a Chapter 13, it is best to begin planning right away how to improve your credit score and start planning how you can avoid getting another bad credit score as soon as the bankruptcy case is over.
You might feel like a pariah in the eyes of credit card companies, credit card issuers, and lenders, but that can be changed. You just have to start building a good credit score and prove that you’re ready to take on financial obligations again. Show them that from having poor credit, you now have the best credit score after bankruptcy.
To start building credit and boost your score, you must exhibit actions that show you’re already capable of borrowing money, even in small amounts, and that you can pay your bills and loans promptly. Here are some tips you can do to repair your credit:
- Check your current credit score. A bankruptcy will reorganize or wipe out your debts, but it won’t wipe your credit reports clean. For most bankruptcies, it could stay on your report for almost 10 years, which will just wipe off after some time. It is important to check your credit report and score after bankruptcy as it will act as the baseline when you build your credit score. A credit bureau can give you a free credit report (you can get free credit scoring from three major credit bureaus in the country). Just make sure to get your credit checked frequently so you can monitor it properly.
- Get a Secured Credit Card. This is essentially the same as when you apply for a credit card, except this one is backed by the deposit you pay, and the credit limit is the amount of money you have on the deposit. A secured card is relatively safer to use than unsecured credit cards when trying to rebuild credit because you can only be charged for what you’ve already prepaid which can help avoid your interest rates and loans from piling up. To improve credit, especially if you have a low credit score, you can use it to pay bills. You can also make frequent loans on your new credit card, just make sure that you pay your credit card balances on time to get a high credit score and avoid getting credit problems.
- Consider asking someone to cosign a loan application. Getting someone with a good credit score to vouch for you and be willing to shoulder your loan should you miss any payments will greatly help your score. Asking someone to become a co-signer is a huge request, so you should be responsible when applying for a loan as it may lead you to another debt spiral and negatively affect your credit.
- Create a budget plan. If you’ve filed bankruptcy, then you must have attended credit counseling before getting a discharge. Creating a budget and monitoring your expenses will greatly help you manage your finances especially when paying bills, house mortgage, auto loans, and other expenses. By creating a budget you can also save for your emergency fund. Having even a few hundred dollars in savings for unexpected expenses can help you steer away from unplanned loans and overspending on your credit card.
- Apply for a checking account. Sometimes, individuals who apply for loans get rejected after creditors see that they’ve filed bankruptcy in their records, or have unpaid credit card debts. One alternative is getting a checking account and applying for a secured credit line through that account. This gives you a better chance of getting approved since you’re already their client.
If you want to know more about how to improve your credit once your bankruptcy petition is over, contact a Northwest Debt Relief bankruptcy attorney. Our Washington & Oregon bankruptcy attorneys can give you legal assistance to help you improve your credit profile and to get better credit scores. Contact us today and let us give you a fresh start.
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The post Life After Bankruptcy: Tips on How to Rebuild Your Credit appeared first on Vancouver Bankruptcy Attorney | Northwest Debt Relief Law Firm.
Are you planning on refinancing your home? If so, you could lose protections from creditors under bill at Legislature
Russ Wiles, Arizona Republic, Arizona Republic Interviews Diane L. Drain about Arizona homestead protection and exposure to creditors.
Published 6:13 p.m. MT Apr. 13, 2021
Homeowners who refinance their mortgag
es could lose protections from debt collectors and other creditors under a bill that’s quietly making its way through the Arizona Legislature.
Critics say that and other provisions could harm homeowners struggling to make ends meet, and the legislation might force debtors to seek additional legal help on old bankruptcy cases they thought were closed.
But House Bill 2617 also could help some consumers, including those in good financial shape, by increasing the amount of creditor protection that all Arizona homeowners receive automatically.
Arizonans currently are shielded from creditors on the first $150,000 of equity in homes they own and live in, thanks to a special provision in state law that’s designed to keep people from being thrown out on the streets. This blanket protection of a person’s home investment would rise to $250,000 if the bill passes.
Purpose of homestead exemptions
This special, automatic creditor protection is known as the “homestead exemption,” a legal shield that exists in nearly all other states, though in varying amounts. It protects a certain amount of a person’s investment in a home, whether a single-family house, condominium, mobile home or another type of dwelling.
The exemption has existed in Arizona for more than four decades, and the Legislature has increased its value many times over the years, providing more protection from creditors.
“The policy of this (long-standing) consumer protection law is that no family should lose its shelter, which is necessary for their survival and ability to work,” said Phoenix bankruptcy attorney Diane Drain.
The idea was to protect homeowners and family farms, but the exemption also has been a “source of frustration for creditors and creditors’ attorneys,” noted a 1997 State Bar article.
At $150,000, Arizona already has one of the higher homestead exemptions, according to Asset Protection Planners, though eight states including Texas and Florida offer unlimited protection. Several others including California, Nevada and Massachusetts shield homeowner equity at or above $500,000.
At the other end of the spectrum, New Jersey and Pennsylvania provide no homestead exemptions, while Virginia and Kentucky allow just $5,000.
Drain said increasing the exemption from $150,000 to $250,000 is a welcome provision that would strengthen homeowner protections, especially as Arizona housing values have risen and more people are pinched financially by COVID-19 disruptions.
Eroding homeowner protections
But the bill has several problems, she said.
One is that it would allow “judgment” creditors – those that have won a lawsuit following an accident, for unpaid medical bills or something else – to grab proceeds from a mortgage refinance. Another is that it would turn any existing court judgment into a lien on a person’s home, automatically and retroactively.
That would undermine “the protection a debtor has under the current homestead• exemption statute,” Drain wrote in a commentary. She called it a “terrible” idea that would “drastically impact all homeowners who are facing financial turmoil.”
It even could hurt other creditors by dropping them to a less-favorable position or rank for claiming debtor assets, said the William E. Morris Institute of Justice, in a commentary. The Phoenix organization predicts a “significant amount of litigation in both Arizona courts and federal courts” and potential “chaos” in Arizona’s bankruptcy system.
In fact, the legislation would allow judgment creditors to have first dibs on proceeds when a homeowner refinances his or her mortgage.
That provision would create “a new right for judgment creditors to receive proceeds otherwise exempt” in the case of a refinancing, said the Morris Institute. “The bill effectively eliminates the homestead exemption by creating an exception to its application in the event of a refinance,”
The legislation not only allows creditors to seize refinance proceeds but requires them to be paid before the homeowner gets anything. (This would apply on future refinances, not those already closed, Drain said.)
‘You still have to pay your bills‘
But proponents counter that struggling homeowners shouldn’t be allowed to game the system by tapping into home equity and using the proceedsfor living expenses or for other purposes, rather than paying creditors.
People who pay their bills and refinance to obtain a lower interest rate or lower monthly payments wouldn’t be negatively affected, and all homeowners would benefit from the increased exemption amount to $250,000, said House Majority Leader Ben Toma, R-Peoria, who sponsored the refinancing amendment.
But others who owe judgments and haven’t paid them couldn’t refinance and take the cash while keeping creditors at bay.
”You still have to pay your bills,” Toma said. “We’re not trying to protect that.”
Tucson attorney David Hameroff agrees. “Remember, the person or small business that is owed money may also be cash-strapped as well,” he said in an email.
He’s president of the Arizona Creditor Bar Association, one of the parties supporting the legislation. Arizona bankruptcy attorneys are among those who oppose.
But creditors already have other ways to collect on debts, Drain countered, including forced auctions known as “sheriffs sales” or by garnishing wages and bank accounts. Also, the homestead exemption doesn’t shield a homeowner from needing to pay child support, alimony or tax liens, she noted.
At any rate, it’s an important caveat for homeowners who seek out new mortgages. Refinance activity is brisk lately, accounting for 72% of all new-loan applications taken out by Arizonans in February, the most recent month tracked by the Mortgage
Bankers Association. The report didn’t state why most Arizonans refinance – to obtain a better interest rate, lower payments, tap cash to pay bills or something else.
Despite its complexities and controversial nature, the legislation sailed through the House without any dissenting votes. It now awaits action in the Senate, where it was approved in modified form by the finance committee. Lawmakers currently are working to iron out differences between the House bill and a more detailed Senate version.
Reopening old bankruptcy cases
The bill also could cause problems for people who already thought their bankruptcy cases were closed, critics say.
The legislation including the retroactivity provision could result in the reopening of thousands of bankruptcy cases in which debts were discharged with the homestead protections intact, critics contend. Arizona bankruptcy court judges long have held that liens can’t be attached to a debtor’s homestead amount and thus aren’t relevant in a bankruptcy case.
But if the legislation is enacted, “Thousands of bankruptcy cases will need to be reopened at a substantial cost to the homeowner to obtain a court order avoiding a lien that did not exist at the time of the original bankruptcy,” said the Morris Institute.
Drain agrees. “This will be a huge expense to debtors, as this is a complicated process that will require them to hire attorneys.”
Arizona has logged nearly 350,000 bankruptcy filings since 2005 – the vast majority by consumers and small businesses. That statistic, derived from data compiled by the U.S. Bankruptcy Court in Phoenix, doesn’t say how many involved homeowners.
There might not be any warning to a homeowner, prior to signing refinance documents, that creditors would receive all proceeds to satisfy a debt before the borrower gets anything.
“The end result is the homeowner cannot make the necessary repairs on their home or pay their essential expenses while struggling financially,” Drain said.
Reach the reporter at russ.wiles@arizonarepublic.com.
@media only screen and (max-width:980px) {.fusion-title.fusion-title-1{margin-top:15px!important; margin-right:0px!important;margin-bottom:0px!important;margin-left:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-1{margin-top:10px!important; margin-right:0px!important;margin-bottom:10px!important; margin-left:0px!important;}}MUSINGS BY DIANE:
My favorite client, or prospective client, is someone who wants to learn as much as possible about their situation, so they can make informed decisions. Finances are confusing and everyone needs to take time to determine the best way to find a solution that works in the long run, not just today. Never rely on the Internet for advice – there is more bad advice than good. Always seek advice from at least two people who are experienced in the area you need help. Once armed with good information, then use your common sense to decide what is best for you.
Be very careful when exposing your home to your creditors. As laws change (they do all the time) your rights also change. Yet, you will not know about the change unless you continue to investigate.
@media only screen and (max-width:980px) {.fusion-title.fusion-title-2{margin-top:0px!important; margin-right:0px!important;margin-bottom:6px!important;margin-left:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-2{margin-top:10px!important; margin-right:0px!important;margin-bottom:10px!important; margin-left:0px!important;}}– Diane L. Drain.fusion-body .fusion-builder-column-2{width:100% !important;margin-top : 30px;margin-bottom : 0px;}.fusion-builder-column-2 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 30px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 45px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-2{width:100% !important;order : 0;}.fusion-builder-column-2 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-2{width:100% !important;order : 0;}.fusion-builder-column-2 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}.fusion-body .fusion-flex-container.fusion-builder-row-3{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}.fusion-button.button-1 {border-radius:10px;}.fusion-button.button-1.button-3d{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}.button-1.button-3d:active{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}Click here for steps to your free bankruptcy consultation
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- Enforcement of Arizona Money Judgments and Debtor’s Home
- Do I have to pay a judgment before selling my home?
- Arizona Sheriff’s Sale Process – Collect of Debt
- Excess Sale Proceeds – Arizona specific
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The post Possible Change in Arizona Homestead Law & Refinancing appeared first on Diane L. Drain - Phoenix Arizona Bankruptcy Attorney.
KXAN Austin reports the the popular Austin, TX based theater chain is closing two locations in the State of Texas in response to their recent Chapter 11 Bankruptcy filing. The two locations are in Austin, TX and San Antonio, TX.
From the article:
Alamo Drafthouse has 41 theaters in 10 states, including six theaters in Austin. Only three of those theaters are currently open and each has a scaled-down number of movie options.
In a statement released Thursday, the company said, “Alamo Drafthouse isn’t going anywhere — promise.” They’re going to continue to show movies this weekend at each location.
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The post Alamo Drafthouse Files for Bankruptcy, Two Texas Theaters Will Close appeared first on Allmand Law Firm, PLLC.
A Bankruptcy Trustee may not recover payments made to a landlord concerning commercial rent arrears or to a supplier, on or after March 13, 2020, resulting from workouts before the bankruptcy filing, under new Section 547(j) of the Bankruptcy Code. These changes were made pursuant to the Consolidated Appropriations Act of 2021. Congress made these changes to the bankruptcy code in an effort to encourage commercial landlords and suppliers to engage in workouts with tenants and customers due to the pandemic, by mandating that these payments would not be deemed preferential, if they were made after March 13, 2020. The new law will remain in effect for two years, ending on December 27, 2022. These changes to the law will prevent Chapter 7 bankruptcy trustees from commencing preference actions against commercial tenants or suppliers that meet the above requirements of the law. My Law Firm has been involved in many workouts where our clients have raised the issue of whether accommodations given to debtor(s) can be recovered by bankruptcy trustees if those debtors later file for Chapter 7 bankruptcy. Although the bankruptcy code did provide defenses before the law change, such as the ordinary course of business and/or the new value exception to a preference, these law changes now provide certainty against preference actions in these types of workouts. If you have questions regarding preference actions, you should contact Jim Shenwick at (212) 541-6224 or [email protected]to discuss the facts or strategies involved in those cases.
This article was first reported at Courthousenews. The url is https://www.courthousenews.com/drivers-sue-over-sky-high-nyc-taxi-licens...
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BROOKLYN (CN) — Taxi cab drivers are seeking more than $2.5 billion from the New York City Taxi & Limousine Commission, saying they paid artificially inflated prices for their taxi medallions, collectively losing hundreds of millions as a result.
The class action RICO suit, filed Tuesday in the Eastern District of New York, accuses the TLC of running a 13-year scheme to defraud those who bought medallions, which are the metal plates required for taxi drivers to work legitimately.
New York City made $855 million from auctioning off medallions and charging a 5% transfer tax on each transaction, the 105-page complaint says.
Because of the scheme, prices rose drastically under former New York City Mayor Michael Bloomberg, a named defendant in the suit. Between 2004 and 2014, costs jumped from $200,000 in 2001 to more than $1 million in early 2014.
The sky-high prices, drivers were reassured, were worthwhile. Commission representatives told them that the medallions were as “good as gold,” the suit claims, and that the purchase was secure because TLC has a “monopoly” over taxis in New York.
The first named plaintiff, Alec Soybel, says that TLC Chief Executive Officer Matthew Daus had told him that buying a medallion was a “once-in-a-lifetime opportunity” to become a middle-class American and enjoy a “worry-free retirement.”
“Daus further stated that purchasing a medallion was ‘what the American dream is all about,’” the suit says.
The suit further alleges that TLC was aware that inflated prices were plunging drivers underwater.
According to the suit, an internal 2010 report by a TLC policy analyst found that medallion owners were barely earning enough to pay for their medallion loans and operating costs.
The report estimated that a driver would have to earn more than $91,000 annually to service a 15-year mortgage on the badge, plus costs.
“Thus, by 2010, it was already clear that medallions were grossly inflated, and that medallion loans at such inflated prices were unsustainable,” the complaint reads. But TLC did not release that report publicly until June 2019.
Now, drivers say they are at a loss. Soybel is “saddled with a suffocating debt that he has no way of ever paying off,” according to the complaint.
Last year, New York Attorney General Letitia James launched an investigation of the TLC, accusing the commission of charging inflated prices and forcing drivers who bought them to clock obscene hours to make ends meet.
“What’s worse is that the TLC knew their actions were affecting some of the city’s most financially exposed immigrant families,” the attorney general said at the time.
James dropped the matter in February of this year, saying that a lawsuit could take years, and that a bailout for the drivers would be a better option. State legislators have also discussed a potential bailout. The drivers are picking up where she left off.
“Our lawsuit seeks to finish the job that AG James started,” said Jon Norinsberg, attorney for the taxi drivers, in an email to Courthouse News.
Norinsberg said the attorney general “did a great job exposing the fraudulent and deceptive practices engaged in by the TLC and City of New York,” and that the plaintiffs’ own investigation confirmed and expanded upon those findings.
“We are seeking to recover full restitution for all medallion owners, many of whom owe hundreds of thousands of dollars because of TLC’s fraudulent scheme,” Norinsberg said, “which directly led to the collapse of the medallion market.”
Neither the TLC nor New York City’s legal department immediately responded to requests for comment on Tuesday afternoon.
In prison? If You Are Going to File Bankruptcy, You Must Follow the Rules – No Exception.
In re Harrell, BAP No. EC-20-1091-BTL (9th Cir BAP, 3-20-21) Harrell is incarcerated at Folsom State Prison in California. He filed a “skeletal” chapter 7 bankruptcy case on March 2, 2020. Later that day, the clerk issued a Notice of Incomplete Filing (“Notice”), instructing Harrell to file by March 9 a Statement of SSN (Form 121) and Verification and Master Address List, and to file by March 16 the Statement of Monthly Income, Schedules A-J, Statement of Financial Affairs, and Summary of Assets and Liabilities. The Notice stated that if two filing dates were shown, each date must be timely satisfied as to the documents governed by that date.
On March 10, Harrell filed all of the documents listed in the Notice, with the exception of the Verification and Master Address List, which was due March 9. On March 11, Harrell requested, and the bankruptcy court granted, an extension of time to file missing documents. Harrell was given until March 30 to file them.
On March 26, Harrell filed a “Request for Assistance Giving Notice to Creditors.” Harrell stated that he was unable to provide notice of his case to creditors, because he filed his only copy of his bankruptcy documents on March 10 and Folsom was on lockdown due to the COVID-19 pandemic. On March 31, the clerk issued an Order Dismissing Case for Failure to Timely File Documents, stating that the case was dismissed for failure to comply with the Notice.
The Appellate Court affirmed the bankruptcy court’s decision, which means Mr. Harrell’s case stays dismissed. But stated “Harrell is free to file another chapter 7 case if he so chooses.”
.fusion-body .fusion-builder-column-1{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-1 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-1{width:100% !important;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-1{width:100% !important;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:980px) {.fusion-title.fusion-title-1{margin-top:15px!important; margin-right:0px!important;margin-bottom:0px!important;margin-left:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-1{margin-top:10px!important; margin-right:0px!important;margin-bottom:10px!important; margin-left:0px!important;}}MUSINGS BY DIANE:To follow the rules, first you must know the rules.
Bankruptcy is not a game. If you file bankruptcy you must follow the rules, even if you are in prison. This debtor wanted the Bankruptcy Court to help him file his list of creditors (a requirement to stay in bankruptcy). The Court said “ah, no. That is your responsibility, not the court’s”.
I understand that people want to make their lives better and filing for bankruptcy protection may be one of those options. But, if you are going to jump off the bankruptcy cliff, no one is there to catch you. It is possible you will find hungry sharks in the dark waters below. It is possible you will be forced to give up assets that are not exempt. Understand that your family may be sued in order to take back the monies you paid them while you were not paying other debts. These are just a few of the nightmares that could be waiting for you if you file bankruptcy without understanding the rules.
Mr. Harrell does not know it, but now he has a bankruptcy on his credit, despite the bankruptcy being dismissed. Yes, he can file another bankruptcy, but then he will have two bankruptcies on his credit. Oh, another surprise – there are rules about filing multiple bankruptcies.
Finances are confusing and everyone needs to take time to determine the best way to find a solution that works in the long run, not just today. Never rely on the Internet for advice – there is more bad advice than good. Always seek advice from at least two people who are experienced in the area you need help. Once armed with good information, then use your common sense to decide what is best for you.
@media only screen and (max-width:980px) {.fusion-title.fusion-title-2{margin-top:0px!important; margin-right:0px!important;margin-bottom:6px!important;margin-left:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-2{margin-top:10px!important; margin-right:0px!important;margin-bottom:10px!important; margin-left:0px!important;}}– Diane L. Drain.fusion-body .fusion-builder-column-2{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-2 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 30px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 45px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-2{width:100% !important;order : 0;}.fusion-builder-column-2 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-2{width:100% !important;order : 0;}.fusion-builder-column-2 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}.fusion-body .fusion-flex-container.fusion-builder-row-2{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}.fusion-button.button-1 {border-radius:10px;}.fusion-button.button-1.button-3d{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}.button-1.button-3d:active{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}Click here for steps to your free bankruptcy consultation
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- Transferring Assets Before Bankruptcy
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- Nothing is More Expensive Than Hiring a Cheap Attorney
- The Nightmare of Hiring the Wrong Attorney Based on Price
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CFPB Compliance Bulletin Warns Mortgage Servicers: Unprepared is Unacceptable
Servicers Should Gear Up for Expected Surge in Homeowners Needing Assistance
(April 1, 2021 – reprint from CFPB) The Consumer Financial Protection Bureau (CFPB) today warned mortgage servicers to take all necessary steps now to prevent a wave of avoidable foreclosures this fall. Millions of homeowners currently in forbearance will need help from their servicers when the pandemic-related federal emergency mortgage protections expire this summer and fall. Servicers should dedicate sufficient resources and staff now to ensure they are prepared for a surge in borrowers needing help. The CFPB will closely monitor how servicers engage with borrowers, respond to borrower requests, and process applications for loss mitigation. The CFPB will consider a servicer’s overall effectiveness in helping consumers when using its discretion to address compliance issues that arise.
There is a tidal wave of distressed homeowners coming and responsible servicers must be preparing now.
“There is a tidal wave of distressed homeowners who will need help from their mortgage servicers in the coming months. Responsible servicers should be preparing now. There is no time to waste, and no excuse for inaction. No one should be surprised by what is coming,” said CFPB Acting Director Dave Uejio. “Our first priority is ensuring struggling families get the assistance they need. Servicers who put struggling families first have nothing to fear from our oversight, but we will hold accountable those who cause harm to homeowners and families.” The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides borrowers with federally- backed mortgages with access to forbearance, and private lenders have also provided similar assistance. As of January 2021, approximately 2.7 million borrowers remained in such programs, with 2.1 million borrowers in forbearance and at least 90 days delinquent on their mortgage payments. Another 242,000 mortgages not in forbearance programs were at least 90 days delinquent. Industry data suggest that nearly 1.7 million borrowers will exit forbearance programs in September and the following months, with many of them a year or more behind on their mortgage payments. Beginning with the expiration of the federal foreclosure moratoriums at the end of June 2021, mortgage servicers will need ramped-up capacity to reach out and respond to the large number of homeowners likely to need loss mitigation assistance. To meet this surge, servicers will need to plan now. In its oversight of mortgage servicers, the CFPB is focused on preventing avoidable foreclosures. The CFPB will pay particular attention to how well servicers are:
Being proactive. Servicers should contact borrowers in forbearance before the end of the forbearance period so they have time to apply for help.- Working with borrowers. Servicers should work to ensure borrowers have all necessary information and should help borrowers in obtaining documents and other information needed to evaluate the borrowers for assistance.
- Addressing language access. The CFPB will look carefully at how servicers manage communications with borrowers with limited English proficiency and maintain compliance with the Equal Credit Opportunity Act and other laws.
- Evaluating income fairly. Where servicers use income in determining eligibility for loss mitigation options, servicers should evaluate borrowers’ income from public assistance, child-support, alimony or other sources in accordance with the Equal Credit Opportunity Act’s anti-discrimination protections.
- Handling inquiries promptly. The CFPB will closely examine servicer conduct where hold times are longer than industry averages.
- Preventing avoidable foreclosures. The CFPB will expect servicers to comply with foreclosure restrictions in Regulation X and other federal and state restrictions in order to ensure that all homeowners have an opportunity to save their homes before foreclosure is initiated.
Provided that servicers are demonstrating effectiveness in helping consumers, in accord with today’s compliance bulletin, the CFPB will continue to evaluate servicer activity consistent with the Joint Statement on Supervisory and Enforcement Practices Regarding the Mortgage Servicing Rules in Response to the COVID-19 Emergency and the CARES Act on April 3, 2020, which provides flexibility on certain timing requirements in the regulations.
Read the April 1, 2021 compliance bulletin.
Read the interagency statement regarding flexibilities under Regulation X
.fusion-body .fusion-builder-column-7{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-7 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-7{width:100% !important;}.fusion-builder-column-7 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-7{width:100% !important;}.fusion-builder-column-7 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:980px) {.fusion-title.fusion-title-3{margin-top:15px!important; margin-right:0px!important;margin-bottom:0px!important;margin-left:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-3{margin-top:10px!important; margin-right:0px!important;margin-bottom:10px!important; margin-left:0px!important;}}MUSINGS BY DIANE:
All of us are frustrated by people who can’t or won’t do their job. Especially when doing their job correctly is the difference between losing or saving our home. The times of COVID have and will continue for years to bring mass-confusion to the homeowners, lenders and servicers. But, there is no excuse for the lenders or servicers not doing their job or following the law (that is what they are paid to do). Just because this is all new to them, so what this is your home that is at risk. The only way you can combat lazy people who are not following the rules, is for you to KNOW THE RULES. Do your own homework about the various programs available during and after COVID.
I feel for the lenders and servicers, but that is their job – so they need to learn the rules and know their role in working through the disaster that COVID has wrought on hundreds of thousands of homeowners.
Never default on your mortgage if you can afford to keep paying. Do not assume any of the COVID laws will give you a free ride and wipe out several months of mortgage payments. Trust me – you will have to pay the missing payments at some time – either immediately when your forbearance is over or (if you are really, really lucky) at the end of your mortgage or when you sell your home, whichever comes first. Never trust the lender or servicer to give you competent advice. Always keep written evidence of any discussions or communications (name, date and time, contact info and specifically was said).
This is a dangerous time for us all (yes, even us lawyers who have no idea how and what will happen with the various loan programs).
@media only screen and (max-width:980px) {.fusion-title.fusion-title-4{margin-top:0px!important; margin-right:0px!important;margin-bottom:6px!important;margin-left:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-4{margin-top:10px!important; margin-right:0px!important;margin-bottom:10px!important; margin-left:0px!important;}}– Diane L. Drain.fusion-body .fusion-builder-column-8{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-8 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 30px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 45px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-8{width:100% !important;order : 0;}.fusion-builder-column-8 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-8{width:100% !important;order : 0;}.fusion-builder-column-8 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}.fusion-body .fusion-flex-container.fusion-builder-row-6{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}.fusion-button.button-2 {border-radius:10px;}.fusion-button.button-2.button-3d{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}.button-2.button-3d:active{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}Click here for steps to your free bankruptcy consultation
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- Avoid COVID Mortgage Relief Scams
- Problems Paying Your Mortgage During COVID?
- Don’t Gamble with Your Home During COVID
- Bankruptcy after COVID-19. What Should You Do to Avoid Mistakes?
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Bankruptcy Related Changes Under the CARES Act and the Consolidated Appropriations Act of 2021
February 9, 2021 By Andreozzi Bluestein LLP By: Daniel F. Brown, Esq. (provided here for educational purposes only).
The Consolidated Appropriations Act of 2021
The Consolidated Appropriations Act of 2021 (the “Appropriations Act”) was passed by Congress and became law on December 27th, 2020, and addressed a number of specific bankruptcy issues which had not been addressed as a part of either the original Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) legislation or subsequent amendments or supplements to that Act.
A Quick Review of Bankruptcy Changes Under Original CARES Act
The original CARES Act provided for $1,200 stimulus payments to most individuals. In Chapter 7 filings, the CARES Act also amended the definition of “income” to exclude coronavirus-related payments from the federal government. It also excluded the coronavirus-related payments from “disposable income”. The practical effect of these provisions was to prevent the stimulus payments from affecting a debtor’s eligibility to file under either chapter.
The CARES Act also provided relief to Chapter 13 debtors operating under a confirmed plan, as of the March 27, 2020 effective date. The CARES Act allowed a debtor to request modification of a plan if the debtor is experiencing or has experienced a material financial hardship due, directly or indirectly, to the COVID-19 pandemic. Further, debtors may extend plan payments under the plan for up to seven years after the initial plan payment was due. These changes apply to any case for which a plan was confirmed before the enactment of the CARES Act.
Both the income definition changes and the Chapter 13 Plan modification and extension provisions of the CARES Act will expire on March 27, 2021, so anyone needing to modify and extend a Chapter 13 plan because of COVID-19 must do so quickly.
The CARES Act also modified provisions of the Small Business Reorganization Act (SBRA), which became effective in February, 2020 and which enacted a new Chapter 11 Subchapter V that was intended to allow small businesses to reorganize more quickly and less expensively. As originally enacted, a business’s debts must be less than $2,725,625 in order to be eligible to file a case under Subchapter V. This debt limit was increased to $7.5 million under the CARES Act, but that increased debt limit will expire and eligibility will return to its original dollar limit on March 27, 2021.
Changes Under the Consolidated Appropriations Act of 2021
The Appropriations Act became law on December 27, 2020. That statute made a number of additional temporary changes to the Bankruptcy Code, all of which, by their terms, expire either one year or two years after the changes became effective.
- The Appropriations Act amends the Bankruptcy Code to expressly provide that stimulus payments are not property of a debtor’s bankruptcy estate. This provision expires December 27, 2021.
- The Appropriations Act amends the Bankruptcy Code to provide that no person may be denied relief under three enumerated CARES Act provisions solely because the person is or was a debtor in a bankruptcy case. The three CARES Act provisions are: (a) the foreclosure moratorium and right to request forbearance, (b) the forbearance of mortgage payments for multifamily properties, and (c) the temporary moratorium on eviction filings. This provision expires on December 27, 2021.
- The Appropriations Act amends the Bankruptcy Code to give the bankruptcy court discretion to grant a discharge to a Chapter 13 debtor even though the debtor defaulted on or after March 13, 2020 in not more than three monthly payments under a residential mortgage because of a material COVID-19 related financial hardship. Furthermore, the court can also grant a discharge to a debtor whose confirmed plan provides for curing defaults on a residential mortgage and the debtor has entered into a qualifying loan modification or forbearance agreement with the lender. This does not mean the debtor will be discharged of the mortgage debt, but a debtor will be eligible to receive a plan discharge of other debts even though the debtor did not pay all mortgage payments when due under the plan. This provision expires December 27, 2021.
- Under the CARES Act, borrowers under federally-backed residential and multifamily mortgages can request payment forbearance because of COVID-19 hardships. In the case of federally-backed residential mortgage, the forbearance period can be as long as 12 months. At the end of the forbearance periods, the borrower must pay the deferred mortgage payments in a lump-sum. These deferred mortgage payments caused significant procedural and administrative complications in Chapter 13 cases. To remedy these complications, the Appropriations Act allows qualified servicers to file a proof of claim for the deferred payments, even if the claims bar date has passed. The Appropriations Act also authorizes debtors to modify a confirmed Chapter 13 plan to address the deferred payment plan. If the debtor fails to modify his plan, the bankruptcy court (on its own motion), the U.S. Trustee’s office, the Chapter 13 Trustee and/or any party in interest may move for such a modification. These changes expire on December 27, 2021.
- Ordinarily, a Chapter 11 debtor is obligated to timely make all post-petition payments and to perform all post-petition obligations under an unexpired lease of non-residential real property. The Appropriations Act amends the Bankruptcy Code to allow the court to extend a Subchapter V small business debtor’s time to perform under an unexpired lease of non-residential real property if the debtor is experiencing or has experienced a material financial hardship due, directly or indirectly, to COVID-19. These changes apply only to cases commenced under Chapter 11 Subchapter V and they expire December 27, 2022.
- The Appropriations Act also amends the Bankruptcy Code in cases under all chapters of the Bankruptcy Code to give the debtor (or trustee) 210 days after the order for relief to assume an unexpired non-residential real property lease. Existing law had provided Debtors or Trustees 120 days to assume or reject an unexpired non-residential real property lease. This change expires on December 27, 2022.
- The Appropriations Act also amends the Bankruptcy Code to prohibit a debtor or trustee from avoiding payments made by a debtor during the preference period for “covered rental arrearages” and “covered supplier arrearages.” To qualify for the exemption, (a) the debtor and the counterparty must have entered into a lease or executory contract before the filing, (b) they must have amended the lease or contract after March 13, 2020, and (c) the amendment must have deferred or postponed payments otherwise due under the lease or contract. This provision expires on December 27, 2022.
- The Appropriations Act also addresses the much litigated issue of the eligibility of bankruptcy debtors to obtain PPP loans, but regrettably only adds to the uncertainty. The CARES Act, created the Paycheck Protection Program (the “PPP”), the now-familiar potentially forgivable loan program administered by the Small Business Administration (“SBA”). Since the passage of the CARES Act, the SBA has taken the position that companies in bankruptcy are not eligible for PPP loans. The SBA has consistently denied PPP loans for debtors, and the case law around the country has been inconsistent. The SBA has doubled down on position in its January 6, 2021 interim rules, which are also supposed to cover PPP Round 2 loans. The Appropriations Act amends the Bankruptcy Code to permit PPP loans to debtors in Chapter 11, 12 and 13 cases. It also discusses how claims for such loans are to be paid, as a part of a debtor’s plan, if they are not forgiven.
However, the statute also says such PPP loans will be available only if the SBA Administrator sends a letter to the Director of the Executive Office for United States Trustee acquiescing to PPP loans in bankruptcy. Therefore, the new statute seemingly delegates to the SBA administrator the discretion whether to approve PPP loans during bankruptcy, so we do not yet know whether these PPP loans will be available.
Assuming the SBA Administrator acquiesces to PPP loans in bankruptcy, the loans will be available: (a) only in cases pending on or filed on or after the date the SBA sends the aforementioned letter to the Office of the United States Trustee, and (b) only to certain types of debtors, namely, Chapter 11 Subchapter V small business debtors (regular Chapter 11 debtors are not eligible), Chapter 12 family farmer debtors, and self-employed Chapter 13 debtors. This provision, if it becomes effective, will expire on December 27, 2022.
The bankruptcy changes brought about through the CARES & Appropriations Acts provide debtors a window of opportunity that may significantly impact the resolution of their bankruptcies, but that window may be rapidly closing. The attorneys at Andreozzi Bluestein are well versed in how the CARES & Appropriations Acts can impact debtors in all forms of bankruptcy. If you or a client need clarification on how these changes may impact your specific situation, call us today for a no obligation consultation.
(click here for the original article)
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To some extent Congress provided cash-strapped debtors some relief under the two new COVID Acts passed in 2020 and 2021. The problem is that all of the provisions have expiration dates on the changes. There at least to challenges: first, the expiration dates are going to ambush both debtors and their attorneys. Second, the new laws bring with them different interpretations. It will take years for enough courts to determine the “proper” interpretations for that jurisdation. One jurisdiction’s interpretation can differ dramatically from another jurisdiction.
My advice – never rely on advice from the Internet or your neighbor. Understand that the “law” changes regularly, so a good answer today can be a bad answer next year. Seek advice from at least two people who are experienced in the area you need help. Once armed with good information, then use your common sense to decide what is best for you.
Lastly, never look for the easy out. For instance, if you can pay your rent or mortgage, then do so. In the long run, don’t assume you are going to get a free place to live.
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The Bankruptcy Chapter 11 Subchapter V debt limit of $7,500,000 has been extended for 1 more year to March 2022. The House passed a bill, which was signed by President Biden this week. Any clients, attorneys or accountants who have questions about Subchapter V Bankruptcy should contact Jim Shenwick 212 541 6224 [email protected]
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