The Bankruptcy Lawyers Blog

A recent survey by American Bankruptcy Institute (ABI) discloses that filings for consumer bankruptcy in America have finally dropped. Bankruptcy rates have been shooting up for quite some time but the filings in November this year has been surprisingly the lowest in the last nine months.

The ABI report reveals that the number of bankruptcy filings in November was around 115,000. This is more than 10% less than the number of filings in October. ABI stated that the figures were provided to them by the National Bankruptcy Research center. The report also mentions that Chapter 13 bankruptcy constituted close to 30% of the total consumer bankruptcy filings in November.

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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 2010 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. Read the entire article here.

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Homeowners are finding that obtaining a loan modification even with an attorney’s assistance is costly, lengthy and only 50% successful. Filing for bankruptcy has become a viable option for consumers earning an income but facing foreclosure.

Helping a client file for Chapter 13 bankruptcy and putting together a plan allowing the homeowner to catch up on mortgage arrears beats the loan modification process which “has no teeth.”

The Pittsburgh Post-Gazette looks into this rising trend. Read the entire article here.

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Late last week, the Congressional Research Service, the public policy arm and “Congress’ think tank,” released a report entitled “Consumer Bankruptcy and Household Debt” which focused on the effect of its 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) in reducing consumer bankruptcy filings.

As we all know, filings have increased every calendar quarter suggesting that “absent a sharp post-recession reduction, BAPCPA will not result in a permanent reduction in the rate of consumer bankruptcy.”

The report concluded 97% of all household indebtedness is comprised of mortgage debt and consumer credit, causing them to be the major categories of household debt. Consumer credit includes revolving credit (credit card debt) and non-revolving credit such as automobile, education, and mobile home loans. The report separated home equity lending from the mortgage loan category because of its ability to substitute for consumer credit.

The report provided statistical information supporting the increase in the percentage of household income used to pay debt over the past 10 years but not at such a rapid rate to justify the increase in personal bankruptcies.

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A common question from homeowners exploring bankruptcy options is whether to attempt a short sale instead of filing for bankruptcy.  This is a difficult question to answer in general as there are a number of factors to consider and weigh based on the needs and interests of the homeowner.  For practitioners and homeowners alike, one of those factors will no longer be an issue, at least in California.

Starting January 1, 2011, a new California law will prevent first mortgage lenders from suing individuals for any deficiency after the first mortgage lender accepts a short sale.

To help a client decide whether to consider a short sale instead of a bankruptcy the practitioner should review the following factors.

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If you need to know how the United States Bankruptcy Code was written before a certain date, a cool new online tool is now available that will let you set a date in the “way-back machine” and let you see the language as it was before amendments were enacted.

It’s called the BankrLaw Project – a free public service for bankruptcy professionals offered by Professor Robert M. Lawless at the University of Illinois College of Law. Going back as far as January 1, 1980, you can view individual sections of each subchapter the way it was written in seconds!

Check it out here.

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