The Bankruptcy Lawyers Blog

On Tuesday, May 24^th, Senator Patrick Leahy (D-VT) introduced legislation to strengthen the tools available to US Bankruptcy Trustees to protect American homeowners from creditor fraud in bankruptcy court. Leahy introduced the Fighting Fraud in Bankruptcy Act, with cosponsors Sheldon Whitehouse (D-RI) and Richard Blumenthal (D-CT).

The Executive Office of the U.S. Bankruptcy Trustee (EOUST) was established within the Department of Justice in 1978 to protect the integrity of the federal bankruptcy system. The EOUST has recently reviewed thousands of proofs of claim filed by mortgage servicers, and discovered an error rate more than ten times the rate asserted by some in the mortgage servicing industry. In response to increased efforts by the EOUST to hold mortgage services accountable in the bankruptcy process, mortgage servicers have been challenging the legal authority of the trustee and bankruptcy court to take steps to obtain additional documentation or provide sanctions for defective or fraudulent filings. The Fighting Fraud in Bankruptcy Act will bolster the EOUST’s ability to fight creditor fraud and protect homeowners in the bankruptcy process, while preventing needless litigation over its authority to do so.

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Many stable homeowners found themselves in their financial crunch after taking out a “safe” second mortgage only to have the bottom fall out under them. All is not necessarily lost according to the San Jose Mercury News’ Pete Carey.

Bankruptcy might be the way to shed that second mortgage and still retain the American Dream. Mr. Carey writes, “Stung by the crash of the housing market, some struggling homeowners are using a little known but increasingly popular provision of the bankruptcy code to eliminate second mortgages and avoid foreclosure.”

“Statistics are hard to come by, but bankruptcy lawyers say the provision has been used effectively on hundreds, if not thousands, of cases in the Bay Area during the past two years.”

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According to a new survey by legal information website FindLaw.com, nearly one in eight Americans – 13 percent – have either filed or considered filing for bankruptcy.

The survey found that people between the ages of 35 and 54 are 50 percent more likely to have considered filing for bankruptcy than people ages 18-34 or 55 and older. People of retirement age (65 and older) are the least likely to have considered filing for bankruptcy (7 percent).

Last year saw the highest rate of personal bankruptcies since the 2005 BAPCPA laws were enacted with over 1.5 million Americans having filed. With the U.S. populations at 307 million, that would mean 4% of those who considered bankruptcy actually filed in the past year alone.

The FindLaw survey was conducted using a telephone survey of a demographically balanced group of 1,000 American adults and has a margin of error of plus-or-minus 3 percent.

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We’ve posted recent news about the Supreme Court’s Lanning and Ransom decisions on their interpretations of the Means Test which BAPCPA added to the Bankruptcy Code. Now comes word that the Bankruptcy Rules Committee plans to propose a new version of the Means Test form B22 which would accommodate for these cases’ interpretations.

Katie Porter of Credit Slips writes a very interesting and detailed view of where this might be heading and why it is troubling to be putting even more requirements on the debtors.

Read Ms. Porter’s full article here.

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Get the complete Press Release at: http://www.prweb.com/releases/2011/5/prweb8376141.htm

All-inclusive bankruptcy solution provider introduces new product designed to provide essential tools for rebuilding your credit & guiding you to financial freedom. 

FORT LAUDERDALE, FL., April 25, 2011 – Start Fresh Today, a national leader of online credit counseling and debtor education courses for consumers, as well as bankruptcy certificates, due diligence documents, and document storage for bankruptcy attorneys, has introduced its brand new “Financial Success Kit”, the company’s first after-bankruptcy product for consumers. fsktoday.com

The kit contains essential tools for rebuilding your credit, and includes: a 200-page life-changing hardcover publication “How to Be the Family CFO”, written by Kim Snider, offering 4 simple steps to put your financial house in order, and an eBook, authored by Mitchell Allen, entitled “A Survival Guide to Debt: How to Overcome Tough Times & Restore Your Financial Health.” The kit contains over 40 Financial Education Videos, as well as Financial Wellness Articles & Personal Budgeting Forms on CD. In addition, it offers iMoney Quest, a personal on-line, interactive financial literacy course that provides clear and understandable financial management information.

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While many regional statistics have recorded decreases in 2011, in March, 1,881 bankruptcies were filed in Orange County, California, thus reaching its highest total since the federal bankruptcy law changed in October 2005, reports the Orange County Register.

According to data from the U.S. federal bankruptcy court, the number of bankruptcy filings was also 10.1 percent higher than last March.

The most significant increase in local bankruptcy filings came in Chapter 13 - typically filed for individual reorganizations - which rose more than 54 percent in March, according to the news source.

Chapter 7 bankruptcy filings, which are liquidations for businesses and individuals, climbed 3.4 percent.

"On the consumer side, more people in Orange County are experiencing the flow through of losing their home, losing their job, high credit card debt and the final step is personal bankruptcy," a bankruptcy attorney told the news source.

One indication of the increases in bankruptcy filings came when prominent Orange County realtor John McMonigle filed for Chapter 7 bankruptcy earlier this month, according to the Daily Pilot.
One reason bankruptcies continue to rise locally is the slow real estate market, said Costa Mesa bankruptcy attorney Evan Smiley of Weiland, Golden, Smiley, Wang Ekvall & Strok, LLP.

"The recession might be over from a definitional standpoint, but the economy has been stagnant, at least in California," Smiley said. "In Southern California it is very real estate related. There is such tightening in lending requirements (for both individuals and businesses) that it is difficult to do anything.

"Until the banking industry loosens up its underwriting requirements, I don't see things getting all that much better," Smiley added.

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