The Bankruptcy Lawyers Blog

Are African-Americans not getting the "fresh start" they deserve when filing for bankruptcy? According to a new study entitled "Race, Attorney Influence, and Bankruptcy Chapter Choice," by Jean Braucher of the University of Arizona and Dov Cohen and Robert Lawless, both of the University of Illinois, blacks file Chapter 13 at higher rates than all other races.

The abstract states that "although chapter 13 can offer some legal advantages for persons seeking to
protect valuable assets such as a house or automobile, it generally offers less relief and costs more than the primary alternative available to consumers, chapter 7. The chief feature of a chapter 13 bankruptcy case is a plan under which the debtor must devote all of his or her disposable income to creditor repayment over a 3‐ to 5‐year period. Chapter 7, in contrast, requires only that the debtor turn over all nonexempt assets, with over 90% of chapter 7 debtors having no assets to turn over."

You can download the full paper from the Social Science Research Network here.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The Milwaukee-Wisconsin Journal Sentinel’s Cary Spivak reported on the latest ruling cracking down on the “hotbed for bankruptcy petition preparers” that is Milwaukee. Chief Bankruptcy Judge Pamela Pepper cited Jennell McKinley for contempt of court and will be facing possible criminal charges.

McKinley is the fifth preparer to be found in contempt. Bankruptcy court officials argue that some preparers’ filings leave out critical information causing dismissal of the case and leaving the debtor liable.

The bankruptcy filer in the McKinley case, Richard Marek, paid $180 for the assistance in filing bankruptcy which was filled with numerous errors and omissions that led to a “nightmare” of a 341 meeting.

Judge Pepper has ordered McKinley to return the $180 to Marek, plus an additional $500 fine. Even better news for Marek is that a generous local attorney heard about his situation and is handling his case pro bono.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

According to a new report from Fitch Ratings, 2011 personal bankruptcy filings declined by 12% to 1.35 million from the year earlier. It was the first decline in four years, possibly resulting from somewhat improved economic conditions and decreased consumer spending.

Credit card charge-offs, which are directly affected by bankruptcy filings, fell significantly through 2011, sliding 37% from the year earlier. Lower personal bankruptcies had a less profound, but still important, effect on auto ABS, Fitch said.

Fitch said it plans to release its 2012 bankruptcy forecast in the coming weeks.

Continue Reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

When a debt collection company or buyer shows up in District Court, they are usually just going by a person’s name, last known address and Social Security number to obtain a judgment against that person.

Reacting to a flood of uncontested debt collection cases, the Maryland high court has just ruled that for all cases filed on or after January 20, 2012, collectors and creditors must produce actual proof that the debtor incurred the debt. It is a national problem that has generated concern among the District Court, the Maryland Commissioner of Financial Regulation and the Office of the Attorney General.

Continue Reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

You’re stuck at the office but things have slowed to a crawl. The phone’s not ringing and you’ve already updated your Facebook page. What to do?

The Legal Intelligencer has a great post by Neen James with some great tips for cleaning up and preparing for the New Year by organizing your 2011 mess including:

• Clearing, deleting or filing those read e-mails in your inbox.
• Throwing out unwanted, unread journals that you have been "meaning" to read, but haven’t and won’t.
• Entering details into your contact management system of the business card pile that is gathering dust on your desk.

In addition to those mundane housekeeping tasks, she also offers ideas for activities involving your firm’s team and client strategies.

Continue Reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In the past, our firm, Acclaim Legal Services, mainly filed Chapter 13 bankruptcies to stop foreclosure sales and give borrowers the opportunity to cure outstanding mortgage arrearages. More and more, we are seeing clients choosing to surrender their property under the Chapter 13 plan due to severely declined house values. Chapter 7 may seem like the obvious choice when surrender of property is the goal, however, in many circumstances an individual may not be eligible for Chapter 7 (e.g., too much income, prior Ch. 7 within 8 years) or their overall circumstances may dictate that a Chapter 13 is more appropriate (e.g., non-exempt property exists and client seeks to avoid liquidation; substantial priority debt exists that the debtor needs an opportunity to pay as it would be non-dischargeable in Ch. 7; debtor seeks to reorganize other secured debts such as a vehicle while surrendering his or her home).

The majority of states are “recourse” jurisdictions which allow mortgage companies to pursue borrowers for deficiencies that remain following a foreclosure sale. Previously, if homeowners had just a first mortgage, they generally could walk away without further obligation or indebtedness to the mortgage holder. This was primarily due to the mortgagee submitting a “full debt bid” at the foreclosure sale thus negating the possibility of a deficiency on the note. The tide has now turned and we are seeing banks begin to submit less than full debt bids and subsequently pursue borrowers for loan deficiencies after the foreclosure sale.  A recent Wall Street Journal article, “House is Gone but Debt Lives On,” detailed the national trend: Visit our website for more information.

Continue Reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

A recent editorial by the Milwaukee-Wisconsin Journal Sentinel focused on how too many bankruptcy petition preparers are going well beyond what is allowed under the law and hurting poor petitioners in the process.

Urban areas have no shortage of people who prey on the poor. Fliers posted at corner gas stations or hand-painted signs that sprout like weeds across the central city promise relief from financial problems if the poor will only just pick up the phone and call.

Now, the courts are cracking down on a particularly insidious breed: bankruptcy petition preparers.

These non-lawyers help people file for bankruptcy for a fee - and often do a lot more than they are supposed to do, often to the detriment of their clients.

The ranks of the bankruptcy preparers in Milwaukee includes people who have criminal records, people who have been bankrupt themselves - even a disbarred lawyer who has a felony theft conviction, the Journal Sentinel's Cary Spivak explained in a Watchdog Report on Wednesday.

Continue Reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

 

On November 29, H.R. 2192: National Guard and Reservist Debt Relief Act of 2011 was overwhelmingly passed in the House 407-1. The law will extend the exemption for an additional 4-year period, from the application of the means-test presumption of abuse under Chapter 7, qualifying members of reserve components of the Armed Forces and members of the National Guard who, after September 11, 2001, are called to active duty or to perform a homeland defense activity for not less than 90 days.

Sponsored by Rep. Steve Cohen (D-TN), the bill was sent to the Senate yesterday, and its future seems certain to pass barring taking place on a partisan companion Senate bill.

 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Do you have an Amazon Kindle or similar E-Reader? Maybe now’s the time to add one to your Christmas or Hanukkah list. The University of Illinois College of Law has assembled the full U.S. Bankruptcy Code from public domain government materials and it available to download as a book for free through the website creditslips.org.

You can choose from either the basic text version of the U.S. Bankruptcy Code and Federal Rules of Bankruptcy Procedure (FRBP) or including the historical and revision notes. Get them in either the Kindle .mobi or generic E-Reader .epub format.

Continue Reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link