Posted on October 31, 2005 by Kevin Chern Esq.
A Republican-sponsored bill is currently under debate in the House which would suspend a lawyer's license to practice if they repeatedly file "frivolous" lawsuits. Such suits, in which the law is misinterpreted, or the facts do not hold up, cost the government in court costs, as well as raising insurance rates, according to proponents of the bill. However, this bill could easily deter legitimate claims if lawyers aren't looking at a sure thing. Our legal system should never strive to turn away cases which may not be cut and dry, the entire system exists to decide such debates.
This is another example of America's wealthy insurance industry tryign to buy a bill which protects its assets and holds any consumers who may have a complaint at bay. The consumer must always have the right to fight back against the large corporation, and by threatenign lawyers who would represent such consumers, this bill would take the legs out from under the individual.
Posted on October 31, 2005 by Kevin Chern Esq.
The following came to me by e-mail yesterday - I'm posting the response for all of you to read here:
----------------------------------------------------------------------
Dear Kevin:
I am a bankruptcy attorney in NJ. Do you think that bankruptcy will survive. The new laws seem to be a killer.
-Ted
Ted,
thanks for your question. Bankruptcy may be a bit more tedious of a process, but it has not gone away. Debtors and their attorneys will have to jump through a few more hoops, but just because the banking industry bought a piece of legislation making the bankruptcy process more of a pain in the legal butt, does not mean that ordinary Americans don't need bankruptcy. For the next three months, you may see a significant dip in filings, but then things will normalize. With over 500,000 filings in the weeks before the law change, the huge rush in the months before that and attorneys' immediate reluctance to file cases until they are abundantly familiar with the law, it's understandable why we have such a dramatic fall off in the last few weeks. This trend will likely continue through the end of January or start of February when debtors start receiving their first credit card statements from the holidays with 4% minimum payment required.
We all properly conveyed to the general public that bankruptcy would be more difficult after the law change....but maybe we did too good of a job. The banks wanted the public to believe that bankruptcy was going away so fewer folks would consider bankruptcy after October 17th. Bankruptcy lawyers created a panic to drive business before the law change, and to make sure folks got in under the "wire". Now that the law change has come and gone, we all need to do our part to convey to consumers that their rights are alive and well under the new bankruptcy law. Yes, we have a few more hoops through which we must jump, but the bankruptcy system is still there for those in need.
Posted on October 28, 2005 by Kevin Chern Esq.
New bankruptcy laws recently passed require the use of a state median income. The number is calculated by the IRS and the Census Bureau, and their new estimates are about to come out. Several fellow bankruptcy attorneys have expressed concern over how these numbers will be adjusted, and what the new median incomes will be. Obviously for debtors near that median, it could be hugely important if they end up above or below that line; it could be the difference between filing for bankrutpcy and staying buried in debt. Check back with The Bankruptcy Lawyers Blog to see how this issue plays out.
Posted on October 27, 2005 by Kevin Chern Esq.
The new bankruptcy laws don't change investment strategy for most Americans, but making sure you do not end up in financial trouble has become more imporant than it used to be. There is some sound advice from Janet Novack in her article Protection Time.
Posted on October 27, 2005 by Kevin Chern Esq.
Troubles continue for the Bush White House as Harriet Miers withdrew her bid for the Supreme Court today. Citing concern that the process was creating a "burden" for the administration, Miers informed President Bush of her withdrawl last night. Bush "reluctantly accepted" Miers' withdrawl.
Posted on October 26, 2005 by Kevin Chern Esq.
Some of the following I am paraphrasing from NACBA discussions & I would like to thank Linda Hamm for her contributions:
Reports have been pointing to the voluminous number of bankruptcy filings in the 7-10 days leading up to the law change. I wrote about this in earlier posts, see "New Bankruptcy Law is Not Cause for PANIC" - where we quoted trustees as saying, "Four or five months' worth of cases were filed within a week" -- also see "Bankruptcy Filings Deluge Courts"
When the dust settles, we're looking at upwards of 500,000 bankruptcies filed during the last week before BARF, and with an estimated $20,000 of credit card debt per filing (this could be higher), then we're talking about credit card companies that are going to be writing off $10,000,000,000 in debt.
Now before you start feeling sorry for Big Credit keep in mind that they're making money on the credit card transactions, too. They charge 2-3% of each transaction as an additional fee to the merchant who takes the card. "Over 1 billion gallons of gas are sold in the United States every single day (the base figure is 7 billion gallons sold worldwide daily - (National Association for Convenience Stores), and approximately 50% of that is put on a credit card. At $2.75 per gallon, that's $41,250,000 daily, just on gas sales."
Yes, they're taking some upfront losses with the flood of discharges - and I'd be willing to bet that they had hoped for a slight sprinkle in filings instead of a monsoon. Despite their huge loss, they still manage to make more money than they know what to do with. And they're looking at this quarters' losses as an investment in the years to come where a greater % of consumers are stuck with the debt - regardless of the consumer's plight: See Senator Durbin's comments at: "Sen. Durbin addresses bankruptcy bill on the Senate floor". Especially, "What it means is fewer people who walk into bankruptcy court will be able to walk out with a clean slate. Many people walking in, crushed by debt, will find themselves walking out still carrying most of that debt."
I for one am not going to be sending any hallmark cards to Big Credit.
Posted on October 25, 2005 by Kevin Chern Esq.
This probably will not come as much of a shock to many of you who read this blog - I've been writing about the hardships of the consumer for months now. A recent study compiled from mortgage data states that:
"As the cost of living rises and wages stagnate, borrowers are increasingly turning to credit cards to pay their monthly mortgage payment, a new study by a consumer advocacy group says."
Read the full report here: Mortgage Daily - You'll need to register first.
Posted on October 25, 2005 by Kevin Chern Esq.
I am posting Senator Durbin's comments on the bankruptcy bill from his address to the Senate Monday. He speaks plainly and he seems to say just the right words to cut through the political mire and say it like it is.
CONGRESSIONAL RECORD
SENATE
PAGE S11750
Oct. 24, 2005
(Senator Dick Durbin, D-IL)
Mr. DURBIN. I thank the President for recognizing me.
I would like to follow on the remarks made by the Democratic leader of the Senate. The American people we represent expect us on the floor of the Senate to truly represent them and their real concerns-the needs of their families, the needs of their communities, the needs of businesses and farmers. We are elected to speak for them and to come together in common purpose on a bipartisan basis and deal with the real issues Americans face.
I would certainly acknowledge that the pending appropriations bill for Labor, Health and Human Services, which includes education as well, is one of the most important appropriations bills that addresses those needs. In years gone by, there was a Congressman from Kentucky named Bill Natcher who was the chairman of the subcommittee that handles this bill. He always called this bill on the House floor the "people's appropriations bill." I think it was aptly named because it meant so much.
So as we visit this bill this week, it is time well spent, time to reflect on what we can do to help education in America, time to reflect on what we can do in the area of health care for America, medical research for America. It is time to look at some of the most basic programs we count on.
Sadly, this bill is the exception, it is not the rule.
Too many times we come to the floor of the Senate not to serve the needs of the people of this great Nation, but to serve the needs of special interest groups. They dominate this process because it has become such an expensive process. Unless you are independently wealthy and can finance your own campaigns from the millions of dollars you made before you came to the Senate, most Senators, mere mortals, spend their time raising money. From whom? Well, from their voters somewhat but, by and large, from special interest groups. So it is no surprise that the agenda of the Senate reflects those special interest groups.
Just a week ago, the new law went into effect. Professor Warren of Harvard Law School this morning in the New York Times talks about what it is going to mean. This was a 9-year effort by the financial institutions and credit card companies of America to make it more difficult for families to file for bankruptcy. Nine years they put into it, and they finally scored their big victory this year. They got this new bankruptcy bill passed.
What it means is fewer people who walk into bankruptcy court will be able to walk out with a clean slate. Many people walking in, crushed by debt, will find themselves walking out still carrying most of that debt.
Who are these people? Who are these folks who have been accused of abusing the bankruptcy system? Take a look at them: Over half of them are people who were overwhelmed by one thing-medical bills. There was an article in the New York Times this Sunday on the front page-my colleagues might have read it-of a family with health insurance and a sick baby who ended up losing their home, despite the fact they had health insurance, because of the serious medical problems that little baby faced.
This new bankruptcy law pushed on us by financial institutions and credit card companies will make it more difficult for families like that to ever erase the slate and start over. The special interests won again.
Posted on October 25, 2005 by Kevin Chern Esq.
I just read a disturbing article in the ABA's September-October 2005 issue of Bar Leader discussing post-BARF malpractice insurance issues for bankruptcy practitioners. In "Attorneys Concerned about Bankruptcy Reform Provisions,"
Carl Younger, President of Lawyers Mutual Liability Insurance Company of North Carolina, notes two potential malpractice insurance issues that may arise out of BAPCPA. The first involves the new fines and sanctions that can be imposed against attorneys. Younger notes that these fines and penalties will not be covered under most malpractice policies because most such policies exclude "fines, penalties, or special damages . . . ."
Younger notes a second and potentially much more troubling issue involving the new debt relief agency provisions. Younger notes that since most malpractice policies "are limited in their coverage to the practice of law . . . [c]overage may be questioned for actions taken as a 'debt relief agency' when compared to normal coverage for 'practicing law,' he says. It is distinctly possible that [an attorney] would be required to purchase another policy to cover liability of the 'debt relief agency.'"
Notwithstanding, the recent order by the United States Bankruptcy Court for the Southern District of Georgia holding that attorneys practicing before that court will not be considered debt relief agencies, practitioners may want to talk to their malpractice carriers to determine how the new law may affect their coverage.
Posted on October 24, 2005 by Kevin Chern Esq.
Show Me the Money
The following was written as an Op/Ed piece for the NY Times by Elizabeth Warren - she is a professor at Harvard Law, and co-author of "The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke."
Published: October 24, 2005
IS there celebration in the halls of Citibank this week? Is MBNA uncorking the Champagne while Ford Motor Credit serves cake? Eleven years ago, these and other creditors pushed hard to re-elect sympathetic members of Congress who would enact a tougher bankruptcy law. Last Monday, the law they lobbied for went into effect.
It was a long fight - President Bill Clinton vetoed one bill, anti-abortion forces derailed another - but in the end the credit industry succeeded in making it much harder for struggling families to ease their debt loads. The industry helped fend off efforts to soften the bankruptcy bill's impact on soldiers fighting overseas and on victims of natural disasters. It even turned thumbs down on an amendment to limit enforcement of debts that carried more than 100 percent interest.
But is the new bankruptcy law now set in stone? Is Congress that rigid, the financial industry that strong?
In a free-market economy, bankruptcy laws are written and rewritten as new economic problems bubble to the surface. Today, consumers and small businesses that have been swamped by debt are in the crosshairs. Tomorrow, insurance company failures, a collapse of the mortgage-lending market, or another outrageous story of a Wall Street executive who hung onto a fortune while seeking shelter in bankruptcy may excite Congressional attention.
Even as the new law goes into effect, there are six new bankruptcy bills pending in Congress, three of them responding to the recent hurricanes. Others are sure to follow: Several members of Congress have railed against the airlines' use of bankruptcy to write off their pension obligations, for example.
Continue Reading...
Posted on October 24, 2005 by Kevin Chern Esq.
Original Article at The Toledo Blade
When Toledo construction worker George Myrice Jr. filed for bankruptcy last month, it stopped collection action by creditors, including those of his landlord.
Judge C. Allen McConnell signed an order suspending eviction proceedings begun by Windy Lake Properties LLC two weeks earlier after Mr. Myrice allegedly missed two rent payments on a house on Berdan Avenue in West Toledo.
But, under bankruptcy reforms that took effect last week, the ability of tenants to delay eviction by filing for bankruptcy will be curtailed.
The reforms will change multiple sectors of the housing industry.
Among those affected are residential landlords and tenants, shopping center owners, condominium and homeowners associations, and people who try to shield assets by squirreling them away in pricey residences in Florida and other states with debtor-friendly laws. The reforms did not affect previous bankruptcy filings.
Overall, the new law is a victory for real estate interests, said Megan Booth, senior policy representative for the National Association of Realtors.
"It was a success for the real estate industry," she said.
Continue Reading...
Posted on October 24, 2005 by Kevin Chern Esq.
Article from the Herald
It is perhaps cruel irony that at the end of a week in which the misnamed federal "Bankruptcy Abuse Prevention Act" went into effect, many ordinary people - including those prone to bankruptcy - watched to see what sort of havoc another major hurricane might bring.
Indeed, more than half a year after the legislation was signed into law, the images and stories of heartache from natural catastrophes Katrina only serve to magnify the bill's shortcomings. While no one is denying that widespread credit card and bankruptcy abuse occur, the new law is far too punitive on those who can least afford to pay.
Continue Reading...
Posted on October 24, 2005 by Kevin Chern Esq.
I'm posting this as a good summary of the pre-law vs. post-law reality. There has been such a flood of press and ads related to getting consumers to file before the law change - now that it's here, it's time to get the word out there that, "you can still file for bankruptcy".
Here's the article:
"Change can be frightening, especially when it concerns legislation governing personal finances.
"Don't hit the panic button just yet," said attorney David Sergeant. "The new bankruptcy law has been somewhat over discussed from a 'scare' stand- point. It's got people thinking they can't file for relief - that's not the case. It just means there will be more work to do. Bankruptcy is still an option."
Sergeant, of Fort Dodge, specializes in bankruptcy law, acting on behalf of both individuals and the government. He not only helps people seeking debt relief, he switches hats and acts as a regional trustee with the Central Division of Northern District of Iowa and is responsible for reviewing cases to determine whether there remains any items of value that can be turned into money for creditors.
As a trustee, he normally has three or four hearing dates set each a month. However, because people were frightened by reports of increased stringency within the bankruptcy laws that went into effect Oct. 17, Sergeant said he expects three times the normal number of hearings to be set in November to handle the flood of cases filed just before the deadline.
"Four or five months' worth of cases were filed within a week," he said. "Everybody wanted to file before the changes took place. As far as I know, one case has been filed since the new law went into effect. Preceding it, I can't tell you how many, probably hundreds."
Continue Reading...
Posted on October 20, 2005 by Kevin Chern Esq.
An amazing number of consumers filed for bankruptcy last week, trying to squeeze in before new laws made bankruptcy a more difficult process. The number has yet to be determined, as thousands of applications are still being processed.
Petitions From the Indebted Pour In as Old Law Runs Out
By Caroline E. Mayer
Washington Post Staff Writer
Thursday, October 20, 2005; Page D03
About a half million Americans may have filed for bankruptcy protection last week, trying to beat the Oct. 17 deadline when a new, more restrictive bankruptcy law took effect.
The courts were so inundated with petitions that thousands have yet to be recorded, according to Lundquist Consulting Inc., a California financial research firm that reports on case information collected daily from the nation's bankruptcy courts.
Lundquist said there were 205,129 bankruptcy filings as of late last week, nearly double the number posted the previous week. But the company said it anticipated another 300,000 petitions to be recorded this week, reflecting the cases filed on Saturday and Sunday as well as the backlog of paper petitions that were submitted last week but not yet posted.
That would make the total filings in the 10 days before the new bankruptcy law took effect about 500,000, or nearly a third of the total filed in all of 2004. Normally, about 30,000 cases are filed a week.
The new bankruptcy law, long sought by the financial industry, makes it harder and more expensive for people to completely wipe out their debts under Chapter 7 bankruptcy.
This week, bankruptcy lawyers say they are receiving very few queries from financially strapped consumers.
Posted on October 20, 2005 by Kevin Chern Esq.
A fun message from a well-respected creditor's attorney:
Not one word needs to be changed! And it's not just the debtor-related provisions. Try to figure out when (and if) the stay lifts automatically under the changes to Sections 362 and 521. Is it 30 days or 45 days after the 341? (Is it x days after the first date set for the 341 or x days after the 341? There may be a difference and Congress has been clear about it before. They can't even get this straight this time and it's in the same section!) Does it matter whether the stated intention is surrender, reaffirm or redeem? What if a debtor expresses an intent to surrender and then surrenders a car within 30 days after the first date set for the 341? Does the stay lift automatically? It does if they don't surrender, but does it terminate if they do surrender? What happens in the gap between 30 and 45 days when a debtor still has time to enter into a reaffirmation agreement or to redeem but the stay terminated after 30 days because they hadn't done it yet? Who wrote this nonsense?
Posted on October 18, 2005 by Kevin Chern Esq.
See the original article on the Motley Fool.
I think Bank of America (NYSE: BAC) likes me. Each month, it sends me three blank checks along with a cover letter enticing me to splurge on whatever I desire. In June, the bank urged me to take a dream vacation. In April, it suggested that I use one of the checks to pay my taxes. All I have to do is write the check, and the charge will go straight to my credit card. Those guys are cool.
As of today, however, I'd better be careful, since the Orwellian-sounding "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" is now law. Six months ago, the credit card lobby, consisting of MBNA (NYSE: KRB), Capital One (NYSE: COF), Citicorp (NYSE: C), Visa, and MasterCard, teamed up with august statesmen such as Sen. Joe Biden, D-Del., and Rep. Tom DeLay, R-Texas, to prevent the average American from abusing the generous privileges being offered by my friends at Bank of America and the other credit card companies. Fortunately for proponents of the law, the irony of the U.S. Congress lecturing anyone on the subject of indebtedness did not prevent its passage.....
Continue Reading...
Posted on October 18, 2005 by Kevin Chern Esq.
As a follow up to the decision in the Southern District of Georgia posted yesterday, holding that attorneys are not debt relief agencies, NACBA member and bankruptcy guru, O. Max Gardner, III has prepared a motion for declaratory judgment that many of you may want to bring in your local district. I have amended the motion for ease of use. Click on the link below to download it. I will keep you apprised as the decisions in various districts come down.
Download the Order
Posted on October 18, 2005 by Kevin Chern Esq.
Also Read Here
Filers rush to beat new bankruptcy law
By Brigitte Yuille - Bankrate.com
Time is slipping away for consumers swamped in debt who want to file for bankruptcy before the new law goes into effect Monday.
Some Web site bankruptcy vendors are offering ways to try to beat the clock. Type in the word "bankruptcy" on an Internet search engine and mostly likely bright, bold-faced advertisements offering "1-hour, Quick Turnarounds!" will appear. These ads tell consumers to download bankruptcy documents from their Web site, sign them and send them off to court.
But experts warn consumers to proceed with caution.
"Bankruptcy is not an overnight process, and anyone promising immediate results or discharges should also arouse their suspicion," says John Penn, president of American Bankruptcy Institute. "As far as services are concerned, bankruptcy can be a very complicated process that is replete with documents and information to be provided within very firm deadlines."
Continue Reading...
Posted on October 17, 2005 by Kevin Chern Esq.
I've taken the trouble to post this ruling, delivered by a Judge in the Southern District of Georgia on the matter of classifying "attorneys" as "debt relief agencies".
I urge you, as bankruptcy attorneys, to read this carefully. And although I see this as a "win" and as a favorable sign, I suggest remaining cautious with your practice for the time being as we watch new developments unfold.
The challenges for the attorneys, outlined in the 4th page of the document: "...a new layer of regulation [would] be superimposed on the bar of this Court, and evaluation of new risks and liabilities will preoccupy them as they strive to represent their clients, comply with existing state regulation of their practice, learn the new...mandates of this new law, and adhere to the separate professional standards applicable to members of the Bar of this Court...That is a burden which should not be borne by the Bar needlessly..."
The essence of the ruling: "Are members of the Bar of this Court 'debt reflief agencies?' Exercising the grant of authority of 11 U.S.C. §§ 526(c)'and 105 and the inherent power of this Court, I declare that they are not."
Read the complete ruling: Download file
Posted on October 17, 2005 by Kevin Chern Esq.
Every credit card company in America will have to raise their minimum monthly payment by the end of the year. This should help some debtors pay off their debts faster, but it will also undoubtably cause some headaches for others.
From Apply Now,Your Guide to Credit / Debt Management.
Though I applaud raising CC minimum payment, I cannot help but be angry.
Minimum payment on credit cards is being raised! It is raising from the existing 2% of the outstanding balance to 4%. Is raising minimum payment good news or bad news? It depends on which side of the credit card balance you are sitting. This issue will be more thoroughly discussed below but I cannot resist inserting a few comments to begin the discussion of raising credit card minimum payments.
GUIDE COMMENTARY
Though I applaud the credit card minimum payment increase, I cannot help but chastise the credit industry and Comptroller of the Currency (OCC) for the timing. I believe there is far too much coincidence that the new bankruptcy law just happens to occur at the same time as raising minimum payment rates. Allow me to ellaborate:
Continue Reading...
Posted on October 17, 2005 by Kevin Chern Esq.
The following was pulled from an interview with bankruptcy lawyer, Max Gardner on CNN Headline News.
"This is a regional cable news show but I wanted to share my talking points with the firm:
The myth that bankruptcy somehow ended at 12:01 a.m. today is false. This propaganda has been advanced by the credit card industry to make consumers believe that bankruptcy relief is no longer available. It is simply not true.
The purpose of the new bankruptcy law is to discourage and in many cases intimidate people from filing for bankruptcy relief. Although consumers must do more things, and pay a little more money to file, all in all things are pretty much the same. My firm is taking new cases today for appointments next week and right now we have filed most of our available appointments.
Continue Reading...
Posted on October 17, 2005 by Kevin Chern Esq.
Not all law makers are in favor of the new bankruptcy law, as exposed in this article from the AP. Some good insight to the other side of the debate. Read the article below.
A federal bankruptcy reform law taking effect Monday is bad law, said the judge who oversees court cases for north Mississippi residents overwhelmed by debt. "There could have been some reform to better the system, but this is a meat-ax approach rather than doing it in a studied way," said U.S. Bankruptcy Judge David Houston of Aberdeen. Congress changed the "gem of our bankruptcy system" so much that there'll be "a subculture of people that will owe a lot of money and just move away," Houston said in a recent interview. The new law imposes restrictions aimed at preventing people from using the bankruptcy court to dodge debts they could actually afford to pay. The "gem" in the current system, Houston said, is the Chapter 13 bankruptcy provision, which lets people with large debts reorganize their finances with court oversight to repay some or all the money over an extended period to creditors.
Continue Reading...
Posted on October 17, 2005 by Kevin Chern Esq.
An AP article discussing how consumers of all ages can face bankruptcy. Read the entire text below.
MADLEN READ
Associated Press
At age 85, the last thing Virginia Norwood needed was to file for bankruptcy - during the past year, her husband died of cancer and Norwood and her daughter have struggled to hold on to their Dallas home.
But on Oct. 1, Norwood filed for Chapter 7 bankruptcy protection, a move that stopped the house from going into foreclosure and allowed Norwood and her daughter, Shari Murphy, 49, to stay afloat.
"I do not know what to do. And I'm very strong, that's what they told me at the hospital. They told me I was the strongest person they'd seen," Norwood said.
"We had to do something," said Murphy, an electrician who, after a back injury and two ensuing surgeries, has had a hard time finding a job.
As of Monday, people with financial plights like Norwood's face a bigger struggle as a new federal law takes effect and places limitations on personal bankruptcy filings. Two age groups, debtors under 35 and those over 65, are expected to have a particularly hard time under the law.
Continue Reading...
Posted on October 14, 2005 by Kevin Chern Esq.
An Open Letter from Credit Card Company to American Consumers
Don't underestimate the impact your late payments made. Just 3% of credit card accounts are past due by 30 days or more each month. Yet income from penalty fees in our industry -- like the ones you paid in January, September, and November -- added up to a whopping $15 billion last year
You deserve a pat on the back for helping the industry reap an all-time high of $31 billion in annual fees, cash-advance fees, balance-transfer fees and merchant fees. Add that to the $80 billion in interest charges banks made last year, and you can see why we're partying. Bob in Consumer Care (he's the third guy from the left in the company conga line pictured on the front of this card) has promised even bigger things to come, including limits on teaser rates, higher charges for access checks, and over-limit charges. We hope that our best customers -- like you -- find these new features <http://www.fool.com/ccc/secrets/secrets04.htm> irresistible.
Since you've been so amenable to our fee increases in recent years (like a rock, you didn't even flinch when that late payment in 2003 canceled out your 9.9% teaser APR <http://www.fool.com/News/mft/2004/mft04102601.htm> or when we shortened your grace period to just 23 days!), we'd like to thank you for your patience and cooperation by giving you seven PlasticFantastic Convenience Cheques embossed with your initials. We're also upgrading your account to our prestigious Minque Card status, and giving you Fantastique Credit Insurance to try out for 30 days, absolutely free! As an added bonus we are offering our best tardy customers something extra special -- pay your bill late three consecutive months and we will name an employee's scholarship account in your honor!
Consider this our gift to you, and a personal "thank you" for making our jobs at PlasticFantastic Inc. more enjoyable.
Sincerely,
Julie
Customer Care Representative
PlasticFantastic Credit Inc.
Posted on October 14, 2005 by Kevin Chern Esq.
Click below to read another good article about the misconceptions about debt in America. The $800 billion owed to credit card companies in this country is not owed by reckless spenders out buying fancy toys on money they don't have. The average debtor in this country is an American just trying to make ends meet.
Click here to read the story.
Posted on October 14, 2005 by Kevin Chern Esq.
As an industry, bankruptcy attorneys have been working overtime lately, not just helping clients file, but correcting client's misconceptions of what the new bankruptcy laws entail. A large section of the general pubilc has been led to believe that bankruptcy will become overwhelmingly diffucult, or even impossible after Monday. This is not the case. The new bankruptcy code requires the debtor to jump through a few new hoops, but consumers who need to file for bankruptcy will find that these new requirements are achievable.
As a debtor, you retain most of the same rights once the bankruptcy procedure is complete, and creditors are not recieving any great increases in their rights. Fellow attorneys have heard questions ranging from, "Will I have to take a lie detector test to file?" to, "Is it true I can not own a car if I file under the new law?" The answer to these questions is NO. The rules are changing, but the end result of filing for bankruptcy remains largely the same.
Posted on October 13, 2005 by Kevin Chern Esq.
It is often believed that those who carry heavy credit burdens are those who buy extravagant goods, and live outside their means. Those of us in the industry know this stereotype is untrue and that many consumers who file for chapter 7 use their high-interest credit cards exclusively for necessary purchases. A new report released yesterday confirms this, just days before a new bankruptcy law goes into effect which will make it harder and more costly for these consumers to file for bankruptcy should they need to file.
Yesterday Demos and the Center for Responsible Lending released findings from a new national survey of household debt in a report called "The Plastic Safety Net: The Reality of Household Debt in America." These survey results show that low- and middle-income families are acquiring credit card debt to pay for essentials at the same time business practices in the credit card industry are making this debt more costly and harder to manage.
This report comes just five days before the new bankruptcy bill becomes effective and undermines consumers' ability to recover from heavy debt. Research shows that credit card debt in America has almost tripled since 1989 and now stands at $800 billion. http://www.responsiblelending.org/promos/101205-demos.cfm
Continue Reading...
Posted on October 13, 2005 by Kevin Chern Esq.
Concern over impending bankruptcy legislation has forced the hand of thousand of consumers over the past weeks. With new bankruptcy regulations making a chapter 7 more costly and the process more lengthy, bankruptcy attorneys are seeing several times their normal amount of business. The new law goes into effect on Monday so this week has been the last chance for many hoping to file under old guidelines. Though the rules will become stricter, and the process more pricey, those wishing to file for bankruptcy after next week will find attorneys still able to help those with legitimate claims.
By Robert Gavin, Globe Staff | October 13, 2005 Struggling debtors are rushing to file for bankruptcy before Monday, when a new law that makes it more complex and costly to gain protection from creditors goes into effect. In the first 11 days of October, more than 2,500 new bankruptcy cases were filed in Massachusetts, compared to 464 during the same period a year ago, according to the clerk's office at US Bankruptcy Court in Boston. More than 1,000 new cases were filed over the long Columbus Day weekend alone. Bankruptcy Court Clerk James Lynch said he expects the deluge to continue through the weekend. Over the last few weeks, local bankruptcy lawyers say they are filing up to five times as many cases as they normally would. The new law, passed by Congress and signed by President Bush in April, represents the first major overhaul of the bankruptcy code in more than a quarter-century. Pushed by banks, credit-card companies, and retailers, the changes make it harder for higher-income families -- in Massachusetts, a family of four with income of $85,000 or above -- to wipe out debts through bankruptcy; require debtors to seek credit and financial counseling, for which debtors have to pay; and boost filing fees. Consumers will feel the greatest impact from the bankruptcy overhaul, specialists said. But the new laws also are less favorable to businesses seeking protection while they reorganize operations, a section of the bankruptcy code known as Chapter 11.
Continue Reading...
Posted on October 13, 2005 by Kevin Chern Esq.
Consumers using high-interest credit cards are about to get an unpleasant letter in the mail: new bankruptcy regulations require creditors to collect minimum payments which pay off debts faster than their high-interest credit cards build it. This is certainly a sound practice for debtors, who could end up paying credit card companies indefinitely under previous minimum payments, but for some debtors, who are barely making minimum payments as it is, this new rule may push them over the edge to bankruptcy. Unfortunately for these consumers, the new bankruptcy regulations also make filing for chapter 7 more complicated and expensive.
Read more here
Posted on October 13, 2005 by Kevin Chern Esq.
This article explores the goals of the new bankruptcy law, and what the new law will mean to consumers wishing to file. The fact is that with the law change only days away, bankruptcy attorneys across the nation are handling more cases than ever before as quickly as they can. A consumer trying to file for bankruptcy today may have a hard time finding a bankruptcy attorney who can handle the case before the new law takes effect. However, while the new laws bring stricter guidelines of who can file, those who legitimately cannot handle their current debts will find the process still available to them.
TUSCALOOSA | Personal bankruptcy filings have increased dramatically in the last six months, and especially in the last few weeks, as people in financial trouble beat the clock set by the sweeping rewrite of the U.S. Bankruptcy Code.
The new bankruptcy law will make it harder for consumers to walk away from credit card debt and other loans they're having trouble paying -- starting Monday.
That's when the 501-page bill President Bush signed almost six months ago takes effect.
Proponents of the new law say it will cut down on bankruptcy fraud and sort out those in dire financial straits from those simply avoiding paying debts. Critics believe it will hamper the efforts of those who legitimately need debt relief, such as someone who loses a job.
This tightening of rules has prompted many people to rush to the bank and file for bankruptcy while the process is not as difficult or expensive.
"It's going to be a lot harder for people to file under the new law, and much more expensive," said Claude Burns, a Tuscaloosa attorney who has been specializing in bankruptcy cases for 20 years.
Burns said that from Sept. 1 until Tuesday, he has processed about 100 new filings for clients. During the same six-week period in 2004, he handled about 40.
Continue Reading...
Posted on October 13, 2005 by Kevin Chern Esq.
Credit card companies have introduced a new wave of cards with no late fees. At first this sounds like a great offer for customers who carry high debt, but there's a major string attached to this deal: late payments can result in higher interest rates, and negative credit reports. Those negative credit reports can, in turn, result in higher interest rates on a consumer's existing outstand debts. Rather than providing consumers with a new option for handling debt, these new cards can actually increase the risk of bankruptcy. Read more below.
New Credit Card Offers Remove Common Penalty
By Caroline E. Mayer
Washington Post Staff Writer
Thursday, October 13, 2005; D01
Credit card companies are pushing new cards with a twist: no $39 fees for late payments.
Designed to blunt criticism of ever-higher fees, the new cards -- with names like "Simplicity" and "Clear" -- still can ding late payers. After extolling its new features, Citibank's Simplicity card offer warns that late payments could trigger an increase in the interest rate charged on balances as well as a negative credit report. Such reports often cause other lenders to boost interest rates on a consumer's other outstanding debts.
American Express Co.'s Clear card will increase a user's interest rate to 28.74 percent if a consumer pays late twice a year.
David Robertson, president of the Nilson Report, a newsletter that monitors the credit card industry, said he thinks the new cards could be attractive to consumers fed up with punitive fees. However, he warns, the $39 late fees that are currently assessed may add up to far less than the hundreds of dollars in extra interest consumers would have to pay over time if the interest rates on their outstanding balances increase. "It's yet to be proven that consumers read the fine print," he said.
Continue Reading...
Posted on October 12, 2005 by Kevin Chern Esq.
It was encouraging to hear a non-apocalyptic BARF story today on National Public Radio. [you can listen to the broadcast here] On the News and Notes show, Pittsburgh bankruptcy attorney Robert Williams gave a calm and concise overview of BAPCPA. When asked whether individuals considering bankruptcy should rush out and file before the new law goes into effect, he cautioned against it. Instead, he suggested that such individuals should seek "experienced legal professionals," who will ultimately learn how to get the most for their clients under the new law. Although he recognizes that under the means test, some debtors will have a harder time qualifying for relief under new Chapter 7, many individuals in need and who can show they have special circumstances should be able to find "variances" in the law to escape the preclusive effect of the means test.
In other words, reports of death of bankruptcy have been greatly exaggerated. The public needs to know that the sky is not falling, and Mr. Williams has done an excellent job of keeping it informed.
Posted on October 12, 2005 by Kevin Chern Esq.
WASHINGTON, Oct. 12 [AScribe Newswire] -- American families are turning to credit cards to make ends meet in an increasingly volatile economy, according to "The Plastic Safety Net: The Reality Behind Credit Card Debt in America," a new report released today by Demos and Center for Responsible Lending. Released just five days before the new bankruptcy law takes effect and effectively shuts the door on financial recovery for millions, "The Plastic Safety Net" presents new findings from a national survey on credit card debt among low- and middle-income households -- those whose incomes fell between 50 percent and 120 percent of local median income.
The survey provides new information about why households are in credit card debt, how long they have carried their debt and the impact this debt has had on their economic security.
Continue Reading...
Posted on October 12, 2005 by Kevin Chern Esq.
An interesting press release from the National Consumer Law Center reports that the NCLC and five other consumer advocacy groups approached the "big three" consumer reporting agencies-TransUnion, Experian and Equifax-to get them to make changes in their credit scoring formulas in order to help out victims of Hurricane Katrina-many of whom will undoubtedly experience a reduction in their credit scores as a result of the hurricane. The consumer groups requested that the CRAs develop and retain a "pre-disaster information" credit score based on pre-Katrina credit information for people in the affected areas. Under this proposal, "creditors could still get a current credit score, but at least the consumer credit file would also show the credit score before any Katrina-related delinquencies began to be reported," said Travis Plunkett of the Consumer Federation of America. Clearly, an individual's pre-Katrina score is likely to be a better indicator of his or her future credit behavior than a score temporarily depressed by missed payments as a result of the hurricane.
You will not be surprised to hear that this proposal was not well received. Equifax and Experian both declined the request; TransUnion has not yet responded. How's that for helping out in a crisis.
Posted on October 11, 2005 by Kevin Chern Esq.
Thanks to John Orcutt, the well-respected North Carolina bankruptcy lawyer for supplying a great metaphor to help bankruptcy lawyers describe the difference between the old law and the new law:
"Under the old law, I would wash your car. Under the new law, I will still wash your car, but I'm also required to run around your house 5 times. So, under the new law, you have to pay me to wash your car and you have to also pay me to run around your house 5 times.
...and you have to run around the house with me."
Posted on October 11, 2005 by Kevin Chern Esq.
Even with new bankruptcy laws in place, filing will still be accessible for most debtors. Many debtors racing to file under the current laws could likely have filed successfully once the new laws take effect. Read more here.
Posted on October 11, 2005 by Kevin Chern Esq.
Click here to read an intriguing blog post about Harriet Miers, President Bush's nominee for the Supreme Court.
Posted on October 11, 2005 by Kevin Chern Esq.
I have had some lawyers ask me the following question: If I have a Chapter 13 client under the old law and I convert the case to a Chapter 7 after the law change, is the Chapter 7 controlled by the old law or the new law?
And the answer is.....
OLD LAW!
Posted on October 11, 2005 by Kevin Chern Esq.
The new bankruptcy guidelines have created a new problem for the industry: not enough approved credit agencies.
John Accola of the Rocky Mountain News details the problem:
By John Accola, Rocky Mountain News
October 8, 2005
A week before a tougher national bankruptcy law kicks in, a shortage of "government approved" credit counselors threatens to undermine one of its key provisions.
Designed largely to weed out consumer cases where personal bankruptcy isn't the only option, the Bankruptcy Abuse Prevention and Consumer Protection Act requires debtors to undergo credit counseling within six months before filing for financial protection from creditors.
But as of Friday, the Justice Department reports that just 41 nonprofit credit counseling agencies - some equipped with call centers in Phoenix, Atlanta and Minneapolis - had been certified.
Continue Reading...
Posted on October 11, 2005 by Kevin Chern Esq.
An interesting article discussing the effects of bankruptcy on families.
Sunday, October 9, 2005
By Eileen Alt Powell
Copyright © 2005 AP Wire
NEW YORK -- Three years ago, life looked awfully bleak to Carmine Warren.
While undergoing surgery and chemotherapy for cancer, Warren and his wife Lynette found the insurance payments they were getting didn't make up for his inability to work for weeks at a time, and their bills began piling up.
"It got to the point of: 'Do we pay the bills, do we pay for medicines or do we pay for food for us and our boys?'" Warren remembers.
When creditors threatened to put liens on their home in Orlando, Fla., the Warrens felt they had no choice but to file for bankruptcy.
Bankruptcy is a scary word for many families, who often associate it with failure. But experts say the majority of people who seek bankruptcy protection have suffered a severe financial setback.
Continue Reading...
Posted on October 11, 2005 by Kevin Chern Esq.
Many thanks to attorney Kathy Cruz of Hot Springs, Arkansas for drawing my attention to a study published this past March by the General Accounting Office entitled "Credit Reporting Literacy: Consumers Understood The Basics But Could Benefit From Targeted Educational Efforts." The study, mandated under the Fair and Accurate Credit Transactions Act, surveyed more than 1,500 consumers nationwide to determine their knowledge of credit scoring. Although the study concludes that most consumers have a basic understanding of credit scoring, they do not have a detailed knowledge of much of the particulars associated with credit scoring, such as how long items remain on their credit reports, or the impact that credit reports can have on their ability to secure insurance or obtain employment.
For those of you who actively market your bankruptcy practices, the study contains excellent information you can use in your newsletters, websites, and other marketing materials.
Posted on October 10, 2005 by Kevin Chern Esq.
In one of the first rulings under BAPCPA, In re Kaplan, the United States Bankruptcy Court for the Southern District of Florida held that the new $125,000 homestead exemption cap under § 522(p), covering property that is acquired within 1,215 days of the filing of the petition, applied to a Florida debtor who had purchased a condo within this 1,215-day period.
In so holding, the court rejected a decision by an Arizona Bankruptcy Court, In re McNabb, 326 B.R. 785 (June 23, 2005), which had held that the 522(p)'s homestead cap only applies in states that have not opted out of the federal exemption scheme. In rejecting this decision, Judge Robert Mark concluded that in BAPCPA, Congress specifically targeted what it believed were excessive state exemption laws, such as the Florida homestead exemption.
Although there is no official cite to the case yet, you can read about it here.
Posted on October 10, 2005 by Kevin Chern Esq.
Greg Paeth of the Cincinnati Post posted an article about the new bankruptcy laws today. You can read it here.
Posted on October 7, 2005 by Kevin Chern Esq.
By HARRY R. WEBER
AP Business Writer
BILOXI, Miss. (AP) -- First came out-of-pocket medical expenses, the bills piling up faster than Jerry Gollott and his wife could pay them. Then, sidelined by heart and back ailments, the retired police officer fell behind on his $1,370 monthly mortgage payment.
It wasn't until Hurricane Katrina, though, that Gollott's tenuous hold on solvency turned into a financial freefall that forced him to liquidate in bankruptcy court.
The burdens of the storm could eventually send many others down the same path, but a change in U.S. bankruptcy laws could make recovery even harder for those who follow, experts say.
"It's like staring into a big black hole, not knowing what's gonna happen to you," Gollott said last week as he drove around the debris that litters his battered Biloxi neighborhood.
Legal experts say there will likely be a surge in personal bankruptcy filings along the Gulf Coast months from now, as residents return and take stock. The wait could make things harder for some, as tougher limits on bankruptcy take effect Oct. 17.
Some lawmakers and bankruptcy attorneys are pushing Congress to delay the new law for Katrina victims. The Justice Department this week waived a requirement to undergo pre-filing credit counseling for Katrina victims and gave bankruptcy trustees some discretion on easing other requirements.
Continue Reading...
Posted on October 7, 2005 by Kevin Chern Esq.
By Marcy Gordon, AP Business Writer | October 5, 2005 WASHINGTON --People filing for bankruptcy who were affected by Hurricane Katrina will get some leeway in meeting requirements of a strict new law. The action by the Justice Department's U.S. Trustee Program was disclosed in a letter to a lawmaker on Wednesday, a day after the department temporarily waived for Katrina victims the law's requirement that people filing for bankruptcy get credit counseling first. Some Democratic lawmakers and consumer advocates have said that the new bankruptcy law, which takes effect Oct. 17, will produce hardships for hurricane victims. The changes in the U.S. Bankruptcy Code, which make it harder to erase credit card and other debt through bankruptcy, are the most sweeping in a quarter century and will affect an estimated 30,000 to 210,000 people annually. A Justice Department official told Rep. James Sensenbrenner, R-Wis., chairman of the House Judiciary Committee, in the letter that the Trustee Program has directed its bankruptcy administrators in the field to exercise "appropriate restraint and discretion favorable to hurricane victims" in some of the law's requirements. The requirements in question include the core change made by the new law, an income test for determining whether people can have their debts canceled in exchange for forfeiting certain assets or if they must repay them under a court-ordered plan. The bankruptcy trustees, who administer the law around the country and make decisions on individuals' applications, are being told to consider lost income, increased expenses and other items resulting from the hurricane to be "special circumstances" to be taken into account in the means test. Some relief also is to be given hurricane victims in producing documents and attending public meetings with bankruptcy trustees. ------ Read more here.
Posted on October 7, 2005 by Kevin Chern Esq.
The US Bankruptcy Court recently approved interim rules for Bankruptcy. You can read the entire document here.
Posted on October 7, 2005 by Kevin Chern Esq.
USA Today's Sandra Block has some interesting points about Filing Bankruptcy in the shadow of Bankruptcy Law Reform.
http://www.usatoday.com/money/perfi/columnist/block/2005-10-03-bankruptcy_x.htm
Posted on October 7, 2005 by Kevin Chern Esq.
I've been doing some digging on Supreme Court nominee Harriet Miers' background and finding, like the rest of the world, remarkably little concrete evidence to go on. However, reading between the lines of the little that has emerged in the press, the picture-at least for practitioners of consumer bankruptcy law-is not an encouraging one. For example, Deborah Angell Smith, chairwoman of the Democratic Party of Collin County, Texas, is dismayed by Miers' strong pro-business background:
"I'm seriously concerned that she'll be a judge in the model of Priscilla Owen, who has a clear record of consistently deciding in favor of corporations over individual citizens and working families."
Another interesting tidbit indirectly places Miers on the side of automobile industry, no great friend of the consumer. Locke, Purnell, Rain & Harrell, the Texas law firm where Miers was managing partner, represented a group of automobile dealers in a Texas case in which then Governor George Bush signed a law blocking Texas consumers from collecting a $6 billion dollar judgment against car dealers for predatory lending and keeping secret kickbacks.
Although the prediction business is clearly a dangerous one, my sense is that if Miers' nomination is approved, she will almost certainly take the side of big business against the consumer bankruptcy bar. And if we are lucky enough to have a constitutional challenge to BAPCPA come before the Court-well, let's just say you can forget about that one.
I'd love to be proved wrong, however. If any of you find some good news about Miers, please send it my way.
Posted on October 7, 2005 by Kevin Chern Esq.
The new Fee Changes just released:
Posted on October 7, 2005 by Kevin Chern Esq.
As a courtesy, I am posting the following anonomously, this is a concern expressed by a well-respected, bankruptcy attorney in the field.
[As as a bankruptcy attorney - with the law change approaching]---just how much can my clients really handle---remember I live in Arkansas.
BARF is a burden shifting federal statute. It shifts the burden of creditors keeping and providing records to the debtor---and the courts seem to support this burden shifting---just look at all the BR 3001(c) decisions.
It shifts burden of collecting child support from the state to the ch 13 trustees, it shifts the burden of getting accurate tax info from the IRS filing a POC to the debtor getting that info from the IRS---and analyzing it. It shifts the burden of verifying the petition info from the trustees to debtor counsel, it shifts the burden of regulating the practice of law in BK from state bars to the EOUST.
Continue Reading...
Posted on October 5, 2005 by Kevin Chern Esq.
Read the letter detailing the US Trustees Program to address BAPCPA issues for Katrina Victims here: Download file
Also see the Associated Press release here: Katrina Bankruptcy Filers to Get Leeway
Posted on October 5, 2005 by Kevin Chern Esq.
The Interim Bankruptcy Filing Rules are in: Download file
Posted on October 5, 2005 by Kevin Chern Esq.
Repost from MonstersandCritics.com
US News
People file for bankruptcy at record pace
By UPI
Oct 5, 2005, 19:00 GMT
WASHINGTON, DC, United States (UPI) -- U.S. bankruptcy filings hit a record 13,000 per day last week as people rushed to beat a new and more restrictive U.S. bankruptcy law, a report said.
Some 68,287 people sought bankruptcy last week, a 24 percent jump over the previous week, said California-based Lundquist Consulting. Year-to-date filings of 1.36 million are up 14 percent from last year.
This week is expected to set records as the Oct. 17 implementation of the new law approaches, when it will be more difficult and expensive for people to wipe out their debt under Chapter 7 bankruptcy.
Some Washington area law firms have stopped accepting new clients because of the deluge, the Washington Post reported Wednesday.
Hurricane Katrina victims, however, may skip credit counseling before filing under a temporary measure approved by the U.S. Trustee Program, which oversees U.S. bankruptcy courts.
'Everyone expected a steep spike in filings,' Sam Gerdano, executive director of the American Bankruptcy Institute, told the newspaper.
After Oct. 17, however, court clerk offices 'will be as lonely as a Maytag repairman,' Gerdano said.
Posted on October 5, 2005 by Kevin Chern Esq.
If you're in the Palm Springs area turn into 920 AM KPSI (www.newstalk920.com) at 10:35 AM.
Posted on October 4, 2005 by Kevin Chern Esq.
Although the US Trustee Directive waives the requirement related to credit counseling and debtor education, the Means Test provisions still apply. The practical issue with this is that a consumer hit by Katrina, with above median income for the last six months, will still be subject to Means Testing, possibly disqualifying the consumer from chapter 7 relief. Bottom line is that the new bankruptcy law considers all income over the last six months, while Katrina victims need a law that realistically considers only current income.
As a reminder of how ridiculous it would be for Katrina victims to fulfill the credit counseling requirement anyway, it's worth mentioning that there aren't any UST approved agencies in LA or MS:
"13 offices have been approved to provide counseling for Louisiana filers, but none is located in Louisiana. They say telephone and Internet counseling is available where in-person counseling is not. Five offices have been approved to provide counseling in southern Mississippi, although none are located in Mississippi." - ASSOCIATED PRESS
NYTimes Members see original article: Bankruptcy Law Provision Waived for Storm
Department of Justice Press Release: Download file
Posted on October 4, 2005 by Kevin Chern Esq.
"Stricter rules on wiping out debt take effect Oct. 17"
See the post from MSNBC.com where NACBA member Susanne Robisek (Charlotte NC) was interviewed regarding her practice during the last two weeks before Reform.
Off-interview Susanne mentioned that she "wished it had concentrated less on how high the filings were, and more about how bad and unfair the new law is."
Read the Interview
Posted on October 3, 2005 by Kevin Chern Esq.
President Bush today nominated Harriet Miers-the current White House General Counsel-to fill the seat of retiring justice Sandra Day O'Connor. Although President Bush stated that Miers "has devoted her life to the rule of law and the cause of justice," Miers has never served as a judge, and she has a minimal public record from which the Senate can evaluate her nomination. In fact, speculation is already flying that, as a result of her position as counsel to the President, she will assert the attorney-client and executive privileges in response to attempts to uncover her positions on the issues. Although it's difficult to predict what perspective she will bring to bankruptcy law, because she represented a number of large companies during her years in private practice as a corporate litigator, it's unlikely she'll be any great friend to the cause of consumer bankruptcy law. I'll do some digging and see if I can find out anything more about her.
I welcome any insight or comments.
Posted on October 1, 2005 by Kevin Chern Esq.
The Bankruptcy Code is not the only thing that will be changing on October 17th.
Many bankruptcy courts will be changing a number of their local rules and procedures on that day as well. For example, in the United States Bankruptcy Court for the Northern District of Illinois, my "home court," a number of new rules and procedures take effect on October 17th, including increased filing fees, a new model Chapter 13 plan, and several new general orders covering preconfirmation adequate protection payments under Chapter 13 and the filing of payment advices under Section 521(a)(1)(B)(iv).
Although I haven't surveyed all the courts, I'm hearing that many courts will be implementing new rules and procedures in connection with BAPCPA. In your haste to comply with the new law, don't forget to check out whether your court is changing its local rules and procedures.
