Thursday, December 18, 2008

Vehicle ownership deduction for means test

This is good news for debtors. Debtors are allowed to take the standard ownership deduction on the means test calculation for vehicles that are paid in full.
7th Circuit Cases
Civil - Bankruptcy
Ross-Tousey v. Neary, No. 07-2503 (12/17/08). Appeal, E.D. Wisc. Rev'd and rem'd.

Dist. Ct. erred in finding in Chapter 7 bankruptcy proceedings that debtors who owned cars outright could not take Local Standard transportation ownership deduction for purposes of calculating means test under sec. 707(b)(2)(A)(ii)(I) when determining under Bankruptcy Abuse Prevention and Consumer Protection Act whether debtors must repay portion of their debt or whether debtors were entitled to complete discharge of debt. Debtors are entitled to said deduction, but remand was required to determine whether under totality of circumstances, debtors' financial situation demonstrated abuse under section 707(b)(30(B).

Tuesday, December 16, 2008

Bankruptcy Offices around Chicago, Illinois

With the coming new year, we anticipate a surge in business. After all, holiday bills will be coming due, people will make New Year's resolutions to get their finances in order, not to mention tax refund time as well.

I wanted to announce the opening of our new Joliet office location.
16 W. Van Buren, Suite 303, Joliet, IL 6043, which is just down from the Joliet Bankruptcy courtroom. We offer free consultations, so don't hesitate to contact us for a free legal evaluation.

Our other office locations:

20 E. Jackson Blvd. Suite 850 Chicago, IL

10540 S. Western Ave Suite 402 Chicago, IL

2025 S. Arlington Heights Rd. Ste. 113 Arlington Heights, IL 60005

3333 W. Warrenville, Rd. Suite 200, Naperville, IL 60532

228 N. Genesee St. Suite 205, Waukegan, IL 60085

16 W. Van Buren, Suite 303, Joliet, IL 60432

Monday, October 20, 2008

Chapter 13 can help you stay out of foreclosure court

Chapter 13 can consolidate your debt, pay back your mortgage arrears with no interest, and help save your home from foreclosure.

Cook County's foreclosure court has increased the number of judges from 10 to 14, starting their new schedules Monday.

The Chicago Tribune reports that in Cook County, foreclosures are up over 47 percent for the first half of 2008, and total cases are expected to pass 42,000 by the end of the year.

Contact a bankruptcy attorney in your area and they can help stop the foreclosure, eliminate the stress and help get you back on track.

Tuesday, July 1, 2008

Stopping foreclosure in a tough real estate market

We all know about and have heard about the mortgage shakeup in the United States this last year, including the sub-prime lending issues. We also, all know that there is a glut of homes on the market, sitting unsold due to the poor real estate market conditions. We also know about the downturn in the economy, coupled with soaring gas prices, and soaring sales tax in Chicago & Cook County, IL.

There is hope if you fall behind. While Chapter 13 can be a great tool to stop foreclosure, consolidate debt and help you get back on track. There are a few tips to attack the foreclosure.

Recently, I read an article on the American Bar Association website, called Homing in on Foreclosure. Here are some techniques as set out by the author, Steven Seidenberg.


Some practitioners say that for many homeowners, foreclosure is a form of surrender.

“Few people contest foreclosure,” says Robert C. Hill Jr., a sole practitioner in Fort Myers, Fla., who often represents mortgage lenders. “Only about 5 to 10 percent of borrowers show up, and they just tell the judge their tales of woe,” says Hill. “Some of those tales are very sad, but there’s nothing the judge can do.”

Yet the legal tide that has long favored lenders in foreclosure actions may be turning.

First and foremost, homeowners facing foreclosure actions should seek legal help, says Alan M. White, a professor at Valparaiso University School of Law in Indiana. “It is a shame to see people just walking away from their homes when there is a reasonable solution,” says White, who teaches consumer law. “There are still a lot of preventable foreclosures going on, and they would be stopped if more people sought legal counsel.”

Representing a homeowner who has defaulted on a mortgage is no easy task. The lawyer often must wade through a morass of loan documents, real estate pooling agreements, securitization documents, loan servicing agreements and other papers in order to de­termine who owes what to whom—and what each party’s legal obligations are. The lawyer must be fa­miliar with mortgage foreclosure law, debt collection law, bankruptcy law and consumer protection law.

“It is a complicated practice,” says Charney.

Nevertheless, courts dealing with growing foreclosure caseloads have become more receptive to challenges to foreclosure actions. Timeworn defenses have gained new teeth while new tactics for resisting foreclosures are winning acceptance from courts. (In jurisdictions that permit nonjudicial foreclosures, homeowners must seek court orders enjoining them.)

Illustration by Stuart Bradford

“Increasingly, financial institutions are concerned that what used to be a traditional cookie-cutter foreclosure isn’t anymore,” says Traci H. Rollins, a partner in the West Palm Beach, Fla., office of Squire, Sanders & Dempsey who represents lenders. “Sometimes bor­rowers’ attorneys are raising new defenses. Sometimes they are raising the same defenses as before, but the courts are treating them differently.”

Rollins also sees judges having a more skeptical attitude toward lenders, which she attributes at least partly to widespread allegations of fraud in the financial industry. According to news reports, the FBI and the Internal Revenue Service formed a task force in January to investigate how subprime loans were handled by the mortgage industry and how those loans were bundled into securities.

“Courts are coming into cases with the expectation that perhaps the bank has done something wrong,” Rollins says. “If the borrower alleges predatory lending, the courts look at the case even more closely. And if the bank is labeled as a subprime lender, that’s like wearing a scarlet letter. It is presumed the bank has done something wrong.”

The result is that courts often will stop a foreclosure for even a tiny error in granting, servicing or foreclosing on the loan, Rollins says. “Alleged hyper-technical violations that courts wouldn’t countenance [a few years ago] are now being looked at more seriously because of the environment where it is believed that a lot of banks have done a lot of wrong things,” she says.

So now, a minor violation of the federal Truth in Lending Act—say, listing on the wrong line the fee for delivering closing documents by Express Mail—may have dire consequences for a foreclosure petition because courts are showing more willingness to use that kind of technical violation as grounds for dismissal.

“If the borrower received one copy of the disclosure statement instead of two copies, that would not have been taken seriously by the courts in the past,” says Rollins. “Now it is.”

If the court finds that the statute was violated, the borrower may rescind the loan, which would defeat the lender’s attempt to foreclose. All the borrower’s loan payments must be credited back to principal, and the borrower can then seek refinancing for the remaining principal. In addition, the borrower may obtain attorney fees and either actual damages or statutory damages of $2,000.

The courts also are taking a tougher stand on violations of the Fair Debt Collection Practices Act and the Real Estate Settlement Procedures Act, which mandates that borrowers must receive detailed information about the costs of obtaining a mortgage loan and closing on the purchase of a house.

In addition, 36 states—including California, Florida, Illinois, Michigan, Nevada and New York—have enacted statutes targeting subprime and predatory lending.

“They kick in if interest rates and/or points and fees exceed a certain level,” says White. “They regulate certain loan agreement provisions. Some require additional disclosures [to borrowers]. Some require borrowers to receive credit counseling prior to any foreclosure action. Typical remedies include damages or rescission.”

Then there are equitable defenses.

“These are nontraditional, make-it-up-as-you-go equitable causes of action,” Rollins says. They make the argument that, since foreclosure is an equitable remedy, it should be denied to a plaintiff who has not pursued the claim in the spirit of fairness and right-dealing that is integral to equity principles.

“You are seeing more and more allegations that a bank targeted a group of people who had lower incomes and didn’t have a lot of education, or targeted immigrants who were less sophisticated about lending, and gave loans the bank knew weren’t suitable for them,” says Rollins.

Lawyers who represent borrowers say courts are becoming more receptive to equitable defenses. Rollins cites a case in which she is representing the plaintiff in a foreclosure. The borrower, says Rollins, “was recently able to survive dismissal of her claim for ‘wrongful failure to verify employment.’ She claimed that the lender, had it conducted due diligence, would have learned that she was not employed at the income level she in­dicated. The court was unaffected by the fact that she swore to her employment status under oath. Instead, the court held that this may be a viable defense to enforcement/foreclosure of her mortgage loan.”

Counsel for borrowers also have asserted, as an equitable defense, that plaintiffs failed to notify delinquent borrowers of their right to loan counseling under the National Housing Act.

A recent court ruling has opened the way for attorneys to use one of the key mechanisms that created the mortgage lending mess as a weapon to help borrowers fight back against foreclosure actions.

On Oct. 31, 2007, Judge Christopher A. Boyko of the U.S. District Court for the Northern District of Ohio dismissed 14 separate foreclosure complaints because the plaintiffs failed to produce documentation confirming that they were the holders and owners of the mortgages on which they were seeking to foreclose.

In each case, Boyko noted, documents identified the original lending institutions, not the entities that later acquired the loans and were now seeking to foreclose, as the mortgagees. Moreover, the plaintiffs failed to produce documents showing that the loans were assigned to them.

Holding that the plaintiffs failed to establish federal court jurisdiction under Article III of the Constitution, Boyko dismissed their petitions. “This court acknowledges the right of banks, holding valid mortgages, to receive timely payments,” wrote Boyko in his order in In re Foreclosure Cases. “And, if they do not receive timely payments, banks have the right to properly file actions on the defaulted notes—seeking foreclosure on the property securing the notes. Yet, this court possesses the independent obligations to preserve the judicial integrity of the federal court and to jealously guard federal jurisdiction. Neither the fluidity of the secondary market, nor monetary or economic considerations of the parties, nor the convenience of the litigants supersede those obligations.”

Since Boyko’s ruling, more than 100 foreclosure actions have been dismissed in federal courts and some state courts because plaintiffs couldn’t prove they owned the mortgages on which they were seeking to foreclose. Lawyers say the ruling also has spawned some borrower class-action suits.

In the old days, when a mortgage created a long-term relationship between borrower and lender, it was easy for the lender to prove its interest in the loan. The bank that issued the loan would just produce the note, which it still held.

Securitization, however, changed all that.

In the late 1980s, banks started selling their home loans to other financial entities, which “pooled” large numbers of loans, put them into trusts and sold securities based on them. Purchasers of these collateralized debt obligations received regular payments on their investments as borrowers repaid their loans.

That meant loan originators no longer needed to wait years to get returns from their mortgages. Instead, they could sell the loans and make a quick profit. But loan originators also lost their incentive to ensure that borrowers could repay the loans. A default would be someone else’s concern.

Another consequence of securitization is that, because loan originators seldom hold mortgages anymore, a borrower who runs into trouble with mortgage payments is going to find it hard to identify someone in the chain of financial institutions who might be willing to help resolve the problem.

The originating lender has probably sold the loan, so it’s out of the picture. And it is extremely difficult to identify the new holder of the mortgage. That leaves the loan servicer, the company to which the borrower sends monthly mortgage payments.

But loan servicers haven’t seemed particularly in­terested in helping struggling borrowers—perhaps because they have a strong financial incentive to push loans into default.

Servicers typically are paid 25 basis points for servicing performing loans, but double that for servicing loans in default. The fee for servicing a loan with a $100,000 balance, for instance, is $250, but if the loan goes into default that fee would go up to $500. Moreover, once a loan goes into default, servicers can charge late fees, inspection fees and a variety of other fees.

“A $50 charge here, an $80 charge there may not seem like much individually, but it is a lot more than the servicer would get per month from a performing loan,” says O. Max Gardner III, a sole practitioner in Shelby, N.C., who concentrates in consumer bankruptcy law.

The consequence of this system is that entities involved in originating and securitizing loans frequently did not comply with the formalities of assigning the notes and physically transferring them. And now, trying to create a paper trail involves significant time and expense—if it’s possible at all. Judge Boyko’s ruling showed that such a dysfunctional system will likely come back to haunt the lending industry.

“You have to prove to the court that you have the original note and that you have lawfully obtained it via an unbroken chain of assignments,” Gardner says. “Those have turned out to be two very difficult obstacles for trustees to establish. Over 400 loan originators went out of business last year. I don’t see how you get an assignment from somebody that went out of business.” " View the entire article here.

Thursday, June 12, 2008

Barack Obama discusses bankruptcy and debt

Here is an article from that follows up on yesterday's post about the candidates' views on debt, the economy, and bankruptcy.

Obama has round-table talk on South Side

June 12, 2008

Democratic White House hopeful Barack Obama held a round-table talk today on the South Side with three consumers gouged by credit card companies.

“For too long, credit card companies have been using unfair and deceptive practices to trick Americans into signing agreements they can’t afford,” Obama said.

The credit card companies start with teaser rates of four percent, then jack them up to 30 percent, lower customers’ credit limits so they can then charge interest, late fees and over-the-limit fees on them, said Obama and Elizabeth Warren, a Harvard Law School professor who participated in the event.

Obama said he knew only too well how easy it was to get caught by deceptive credit card deals: In the interest of full disclosure, I've gone through this. I've had credit cards, Obama said.

Obama's Republican rival, Arizona Sen. John McCain, has been on the other side of bills on which Obama fought for consumer rights, such as the bankruptcy bill, Obama said. The bill made it harder for consumers drowning in credit card debt to seek refuge in bankruptcy, Obama said.

I fought this bill hard, as many of my colleagues did as well, Obama said. Ultimately it passed. It was jammed through. John McCain was strongly supportive of this bill.

Obama acknowledged that, Part of why our debt crisis is so bad is that some folks are making reckless decisions -- racking up big credit card bills by purchasing flat-screen TVs and other luxury goods that they know they can't afford. But he said the credit card companies are pushing many responsible consumers into inescapable debt.

He proposes a Credit Card Bill of Rights that bans the companies from unilaterally changing rates, especially on past debt; and a ban on charging interest on late fees.

We've heard three examples of what I think most people would say is grossly unfair, but this is not atypical, Obama said after the three told their stories at the Illinois Institute of Technology.

Ironically, Obama's national finance chair, Penny Pritzker, headed up a Chicago-area bank that critics said was a pioneer in predatory lending: Superior. The campaign said Pritzker and her family voluntarily paid $460 million to clear up the banks debts, though that still left 1,400 customers without some of their savings.

McCain's campaign charged that the man who, until today, headed up Obama’s vice-presidential search team, James Johnson, got special mortgage rates from his friend’s bank, Countryside, another sub-prime lender.

“On the same day Barack Obama is staring down headlines about the head of his VP selection committee’s inappropriate ties to a predatory lender, Obama launches blind political attacks against John McCain for voting for the bipartisan Senate Bankruptcy Bill that was actually supported by 18 Democrats,” said McCain spokesman Tucker Bounds.
See rest of article here.

Monday, June 9, 2008

Score one for the good guys..."My Bad = Not Good"

recent case law updates:
In re Crawford
Bankr. S.D. N.Y.
A secured creditor which proceeded with a foreclosure sale after being notified of a bankruptcy filing was liable for actual and punitive damages. The creditor's announced caveat that the sale would be void "if it violated the automatic stay" did not prevent imposition of damages.

When do I get my car title in chapter 13?

I filed CH13 Bankruptcy in June of 05. We put or vehicles into the bankruptcy. We have now, according to the Trustee website, paid off the "agreed" amount on both vehicles. Can you tell me how long it takes to obtain our titles?

If your vehicle was crammed down in the bankruptcy, you will receive them once you get your discharge (Since the over-financed portion is being stripped off in the case and is not official until the debt is officially discharged.) If you paid the car note in full based on your original contract, then the creditor will process the title once they receive the last of the payments. keep in mind, the trustee usually only disburses funds once or twice a month. Check with the lender, and they may have a more precise date for you.

Tuesday, June 3, 2008

Illinois Chapter 13 Bankruptcy Case law.


Initially prepared by John Gustafson, Staff Attorney for Anthony B. DiSalle, Trustee; Revised by Jerry Mylander for Glenn Stearns, Trustee


In re Farrar-Johnson, 353 B.R. 224 (Bankr. N.D. Ill. 2006). Judge Goldgar. Above-median Chapter 13 debtors could deduct standard expenses in means test in calculating disposable income regardless of actual expenses in schedule J.

In re Curry, 2007 WL 549360 (Bankr. N.D. Ill 2007). Judge Schmetterer. Termination of stay under §362(c)(3)(A) terminates the stay in all respects to the property.

In re Morales, 2007 WL 92414 (Bankr. N.D. Ill 2007). Judge Schmetterer. Hanging paragraph in §1325(a) does not allow surrender of vehicle in full satisfaction on entire claim of 910 creditor in Chapter 13 plan.

In re Blanco, 06 B 13223 (Bankr. N.D. Ill. 2007), Judge Squires. Hanging paragraph in §1325(a) does not allow surrender of vehicle in full satisfaction on entire claim of 910 creditor in Chapter 13 plan.

In re Randle, 2007 WL 3734351 (Bankr. N.D. Ill 2006). Judge Doyle. Above-median debtors may deduct secured debt payments in means test in collateral that is being surrendered. (affirmed by the District Court on 7/20/07)

In re Nevitt, 2006 WL 2433491 (Bankr. N.D. Ill 2006). Judge Barbosa. Form B22C does not apply for below median debtors. Also, commitment period is temporal not monetary.

In re Wiggs, 2006 WL 2246432 (Bankr. N.D. Ill 2006). Judge Barbosa. Above-median-income debtors may not take vehicle ownership expenses, even though they own their vehicles outright (only those standard expenses that are “applicable”).

In re Demonica, 345 B.R. 895 (Bankr. N.D. Ill 2006). Judge Barbosa. Debtor’s current income, as opposed to historical average, should be used to determine “projected disposable income. A debtor is allowed to deduct the full amounts listed in National and Local Standards for the categories of expenses that fall within those standards. Additional expenses are only proper if they fall within the additional expense provisions as specified by the IRS or as defined in the Code.

In re Gossett, 2007 WL 1226629 ( Bankr. N.D. Ill 2007). Judge Squires. Credit counseling briefing must be concluded ONE CALENDAR DAY PRIOR to the filing of the petition. Also, in the event of ineligibility, dismissal is the appropriate remedy.

In re Mathis, 2007 WL 1320740 (Bankr. N.D. Ill. 2007) Judge Doyle. The applicable commitment period is a multiplier, determining the minimum amount that the debtors must pay the unsecured creditors.

In re Williams, 2007 WL 1206738 (Bankr. N.D. Ill 2007) Judge Hollis. When the debtor is not entitled a discharge, payment of the underlying debt determined under non-bankruptcy law under §1325(a)(5)(B)(i)(I)(aa) means that the debtor must make payment as required by the contract (at the contract rate of interest). Compare In re Hopkins, 2007 WL 2028799 (Bankr. N.D. Ill 2007) Judge Goldgar. Method of full payment of balance of 910 secured debt not determined by the contract.

In re Robson, 2007 WL 1531610 (Bankr. N.D. Ill 2007). Judge Schmetterer. A debtor must provide monthly adequate protection to a creditor that is equal to the depreciation of the collateral the first month after the filing of the petition.

In re Wright, 2007 WL 1892502 (7th Cir. 2007). Post-petition surrender of 910 vehicle does not preclude a unsecured deficiency claim by a creditor.

Thursday, May 29, 2008

Consumer Action handbook

Here is some general useful information, phone #s, forms etc. for consumers issued by the government. Best of all, it's free!

2008 Consumer Action Handbook Now Available!

2008 Consumer Action Handbook cover graphicThis everyday guide to being a smart shopper is hot off the press and chocked full of helpful tips about buying a car or home, preventing identity theft, understanding credit,filing a consumer complaint, and much more. In the 2008 edition, you'll find updated information about filing for bankruptcy, finding a lawyer, and planning a funeral, along with many other useful topics.

Wednesday, May 28, 2008


Here is some feedback that I have gotten recently based on information and answers I provided about bankruptcy topics.

Recent Reviews from Users
1010106 05/22/08
User Comments
you have helped me a lot. I didn't know that we could go back and change anything in a br. Also that i can filed a chp7 after filing br, thanks.
(Jada on 05/28/08)
(David on 05/27/08)
Very quick, had the answer within 5 minutes
(Geoff on 05/22/08)

Thursday, May 22, 2008

Audits Are Back

May 9, 2008
As mandated in Section 603(a) of Public Law 109-8, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, the United States Trustee Program (USTP) established procedures to audit petitions, schedules, and other information in consumer bankruptcy cases filed on or after October 20, 2006. Pursuant to 28 U.S.C. § 586(f), the USTP contracted with independent accounting firms to perform audits in cases designated by the USTP.

In January 2008, the USTP temporarily suspended its designation of cases subject to audit for budgetary reasons. The USTP is preparing to resume its designation of cases, although random audits will now be conducted in 1 out of 1,000 cases (as opposed to 1:250 cases) filed in a judicial district. The USTP will resume its designation of cases subject to audit effective May 12, 2008.

Tuesday, May 20, 2008

bankruptcy statistics for the Northern District of Illinois

2008 Jan Feb Mar Apr Total

Ch7 1602 1951 2296 2502 8351
Ch11 10 10 11 47 78
Ch13 964 962 961 1124 4011

Total 2576 2923 3268 3673 12440

increase 35% 37% 29% 54%
from 2007

Here are recently published figures for bankruptcy filings for Chapter 7, Chapter 11, Chapter 13 in the Northern District of Illinois. (no chapter 12 cases were filed)
As you can see, the numbers have bounced back and increased significantly over last years figures. This can be associated with increased foreclosures, downturn in the economy, and the increasing unemployment rate.

Chicago Bankruptcy statistics

2008 Jan Feb Mar Apr Total

Ch7 1602 1951 2296 2502 8351
Ch11 10 10 11 47 78
Ch13 964 962 961 1124 4011

Total 2576 2923 3268 3673 12440

increase 35% 37% 29% 54%
from 2007

Here are recently published figures for bankruptcy filings for Chapter 7, Chapter 11, Chapter 13 in the Northern District of Illinois. (no chapter 12 cases were filed)
As you can see, the numbers have bounced back and increased significantly over last years figures. This can be associated with increased foreclosures, downturn in the economy, and the increasing unemployment rate.

Monday, May 19, 2008

interactuve chicago area foreclosure report

Crain's Chicago business recently posted a page where users can see what foreclosures have been filed in the area, searchable by zip code. Check out their interactive foreclosure report here.

Chapter 13 bankruptcy can stop foreclosure action up until the sale date. The Chapter 13 bankruptcy will be designed to cure your mortgage arrears over the next 3 to 5 years, while consolidating your other debt, by paying your secured debt off, and paying your unsecured debt from between 10% to 100% of the total.

Contact me for a free bankruptcy evaluation.

Tuesday, May 13, 2008

How long after chapter 13 can I get a mortgage?

I was recently asked the question in the title by a former client.

There is no official time frame that a chapter 13 debtor has to wait to get a mortgage after a discharge in chapter 13 (or after a chapter 7), it will be up to the lenders to qualify the purchaser. Since the mortgage lenders are going thru some rough patches, (even bankruptcy themselves!) a borrower may have to put a greater down payment down, (10-20%) or may have a higher interest rate. I would say perhaps within 6 months to a year should be the average time table to get a mortgage, but I do stress that it is up to the lenders to qualify the borrower based on their current financial situation. Start looking now, talk to a few lenders to see what time frames they say, and what type of requirements they will have so you can start to prepare. Remember, there is no official time frame that you have to wait after a bankruptcy case.
Good Luck.

Friday, April 18, 2008

Even Pro basketball players can get Bankruptcy Relief

Here is an article that I stumbled upon to show that even pro ball players have bankruptcy issues....although, he brought this on least he is taking steps to cure the on..

From the Press Register

Woman in court in Caffey case

Mother of ex-NBA player's son accused of violating court order
Wednesday, April 16, 2008
Staff Reporter

An Atlanta woman entitled to tens of thousands of dollars in child support from a former professional basketball player went to federal court in Mobile on Tuesday to battle a $40,000 judgment entered against her for violating the player's bankruptcy.

Tuesday's hearing repre sented the latest twist in a saga that has seen former Chicago Bulls power forward Jason Caffey -- who is from Mobile and was a star player for Da vidson High School -- go from admired millionaire athlete to an alleged deadbeat dad who claims he cannot make court-ordered payments to seven women who have had at least eight of his children.

Karen Russell, who has been fighting Caffey for years over payments for their 15-year-old son, did win a small victory in that Tuesday hearing.

U.S. Bankruptcy Judge Margaret A. Mahoney decided that Russell, who now lives in Atlanta, should be able to appeal the $40,000 order, even though the normal 10-day window for doing so has closed.

Earlier this year, Mahoney had ordered Russell to pay after determining that she violated a freeze on debt collection mandated by Caffey's bankruptcy.

Russell said outside the courtroom that she was stunned when she learned that Mahoney had entered the judgment against her.

"It's surprising to me that they would even allow him to file bankruptcy to get out of paying child support," she said.

Under federal law, a bankruptcy judge cannot wipe away Caffey's child support obligations. But all creditors -- including the mothers of his children -- are supposed to stop all efforts to collect their debts while Caffey works out a bankruptcy plan with the court.

Still to be resolved is Caffey's demand that Russell pay his attorneys' fees. Mahoney set a hearing next month for that matter and suggested that Russell might want to hold off on her appeal until a final decision is made then.

Tuscaloosa County Circuit Judge Herschel T. Hamner Jr. found Caffey in contempt in July for not paying child support, and an arrest warrant was issued in August.

Caffey filed for bankruptcy protection that same month, yet Hamner issued the arrest warrant shortly afterward.

Mahoney ruled that Russell had a duty to put an end to the proceedings once the bankruptcy was filed. Not only did Russell not do so, the judge ruled, but she accepted money in October as part of a settlement Caffey's lawyer negotiated in order to get his client out of jail.

Russell, meanwhile, claims that she never knew about the bankruptcy order. She said an address where the notice was mailed is a Montgomery post office box that she set up to receive child support payments.

Lawyers who were representing Russell at the time have said they did not receive notice, either, despite testimony that Caffey's lawyers left phone messages and sent copies of the order by fax and e-mail.

Russell, who works for a chemical company, said she met Caffey when both attended the University of Alabama. They did not date exclusively or for very long, she said, but the relationship produced a son. She said she began having problems getting Caffey to pay within months of a child support order in 1995.

The only time Caffey regularly paid, Russell said, was when it was automatically deducted from his paycheck from the NBA. Court records put the child support debt at more than $82,000; Russell said it exceeds $100,000 when attorneys' fees are included.

Russell's lawyer, Penny Douglass Furr, said the $40,000 judgment against her client is separate from the money Caffey owes, meaning she could not simply deduct the amount.

"That's basically a year's salary for Karen."

Tuesday, April 15, 2008

filing multiple bankruptcy cases

Subject: filing chapter 7 again
Question: Hello,

I want to know if I was discharged from a chapter 7 in 2003 or 2004, can I in 08 file again for a chapter 7 due to a hardship, it would be for a car for 20,500 i also have a credit card that i probably would keep with limit at 1,000 and payments are only 30 a month. I'm also a authorized user for my mom's AMEX and the is on my credit-what will happen to that? I just can't afford paying the vehicle it anymore. I have tried to trade and sell and because of the neg equity and economy no wants to buy. I live in Georgia, is this possible? What is my next step? Please help! Thanks in advance

Chapter 7 is only available again 8 years from the date you filed your last chapter 7. So, here, you would be able to file Chapter 13. With a chapter 13, you can pay back anywhere from 10% and up based on your income and your assets. Speak to a local attorney to help calculate your monthly payment.

Protecting assets in Chapter 13

Subject: bankruptcy
Question: I have thought about filing for bankruptcy, we bought a motor home when our finances were better, they have changed. with expenses of house payment and motor home payment and every day expenses it is getting too much. I am 66 and not working. my husband works because of health care and need the money. his income is around 19,000. we have a little in 401K. what will we be able to keep and can they garnish his wages and take our 401k?

Answer: This would depend on if you have any equity in the assets. Each state has exemptions to protect assets. Speak to a local attorney to do an asset/equity analysis, and if you don't have much equity, then you may qualify for chapter 7. If you have too much, then you would look at Chapter 13 to repay enough debt to protect the asset.

Thursday, April 3, 2008

Mortgage Relief

Good News.

I recently attended a meeting presented by several prominent bankruptcy Judges in Chicago, IL. They discussed numerous topics on the current laws, rules etc. They all seemed to be in agreement that the proposed changes to the bankruptcy code that are pending in Congress currently, namely -reduction of mortgage interest rates and reduction of over financed mortgages - would be beneficial to the economy. They feel that the bankruptcy code is the correct place, since the tools are in place to enforce it and implement these changes...aka....ME!

What is being considered is allowing a debtor who has an extremely high Mortgage ARM, be able to modify that term to a fixed rate loan. They also may allow us to cram down and strip off mortgage amounts above the property's fair market value.

The judges indicate that there will be strict guidelines - such as how low we can reduce the rate, how long we can reduce the rate, and having a window in which the loan had to have been incurred or refinanced. So, now, the task is yours to write your senators and congressmen and women to say that you support this legislation.

Monday, March 10, 2008

Bankruptcy Statistics

801,840 Americans declared bankruptcy in 2007, up nearly 40 percent from the previous year -- in spite of tougher new bankruptcy laws.

76,120 more filed for bankruptcy in February 2008.

Foreclosures are on the rise....economy is slowing down, all contributing to these figures.

Tuesday, February 5, 2008

Quick fire questions and answers

Here are some quickfire bankruptcy questions and answers I've been getting lately. Many of them are about tax refunds, and what to do to finish a bankruptcy. Read up and enjoy!

Here is an updated bankruptcy question and answer session. As you can see there are many bankruptcy issues that can sway a case one way or another. Hold tight, here we go.

Chapter 7 and Lump sum SSDI payment

My daughter applied for SSDI over 2 1/2 years ago. Her husband left her 2 years ago. Their divorce comes up in March. She just received a lump sum payment from Social Security for her disability. She has not paid any of her credit cards, etc. for the past two years however I have been paying her car payment; titled jointly. I have been paying all her expenses the past two years with the agreement she pay me back when she got her settlement. She is planning on filing Chapter 7. Does she have to disclose the lump sum payment of social security disability? She owes me $8k of the $15k she received. What effect will that have on her filing? Also what happens to the car since it is in her husband's name also? She would like to keep it. Thank you.

Yes, she would disclose it. Her attorney will use state exemptions to protect it. She should not pay you, as the trustee in the case can then come after you for the funds.
For a cosigned debt, she can choose to reaffirm the debt so she can keep the car, and should continue to make the regular payments on it.
She should talk to a local bankruptcy attorney to get state specific advice.

Subject: Motion for Deficiency

I live in Ohio. Filed Ch.7. Surrendered our condo to the trustee, he abandoned the property,it went into foreclose and sold at auction. I recently received a notice for motion of deficiency filed by the condo association, which by the way was listed in the original filing. Do I owe this money? What happens if I don't go to the hearing?
Thank you
If you listed the debt in bankruptcy, then the bankruptcy discharged your obligation for this debt. I assume this is a state court motion, where they may be asking for $ from the lender, as they usually have a condo association lien on the property.
IF it is a bankruptcy motion, you should speak to your attorney.

Subject: chapter 7 and tax refund

i live in wisconsin a few years back i was involved in a car accident. the womens attorneys sued for 85,000 and it was granted. i want to file chapter 7 since i really have no assets at all to get rid of this judgement.i still desperately need my tax refund which should be significant w/2 it better for me to file my taxes before or after i file for bankruptcy?should i anticipate them taking a portion or all?i am extremely stressed about this due to having to pay for child care. thank you very much.
Each state has exemptions to protect assets. You should meet with a local bankruptcy attorney to advise you how to protect your assets and when is the best time to file a case. Car accident debts are normally dischargeable, unless there was DUI/DWI or intentional injury.

Subject: Filing taxes post bankruputcy discharge

I have completed a Chapter 7 bankruptcy during 2007. I am unsure how, or if, I am required to report that to the IRS. I owe no back taxes, and taxes were not apart of my bankruptcy. All of the debt that was discharged was consumer credit debt. I maintained my home,car and personal belongings.
As far as I know, there are no special deductions or exemptions to list when filing your taxes in regards to your bankruptcy. You should mention it to your tax preparer just in case, since I am not a tax expert, and the tax code is as big as the bankruptcy code!

Subject: Getting out of Bankruptcy

I need to know how can refinance my home loan and get out of bankruptcy.
I assume you are in chapter 13 bankruptcy. You will need to seek out a lender and get a proposed refinance contract. Then get that to your attorney to draft a motion to permit you to refinance. You should also order a payoff statement from the trustee. Once the motion is granted, (court will look to see if it is reasonable and necessary, comparing costs before and after etc.) then you can close on the loan and turn the proceeds over to the trustee to distribute to your creditors. You should allow about 30 days for the motion to be heard and granted.

Subject: chapter 7 questions

My wife and I recently filed chapter 7(with an atty).I would like to know if I can talk to a lender about the terms of my loan.To be more specific,We own an RV and wish to keep it.However,I/we are not going to "reaffirm".The main reason is I know that the bank doesn't want it and I don't want to be responsible in the future if I cant continue to pay.At the present time we are current on our payments and are continuing to pay.Is it reasonable to ask them to reduce the loan amount or interest rate to help us as long as we continue to pay?.............more important,........Is it legal?

Thank you in advance for your time and help.Please be advised that your answer may generate more questions.I/we ahve talked with our attorney about alot,however he is on his honeymoon at this time and unavailable.
If you do not reaffirm, then there is no negotiation with the lender. The reaf may have better terms for you. if not reaffirmed, the lender has the right to the items back. IF you pay for them, it would be up to the lender if they will agree to let you keep the items if you are current. Since the RV may have some resale value, you need to speak to them directly about the options available if you do not want to reaffirm. They are under no obligation to let you keep the RV, even if you are current, if you don't sign the reaffirmation.

Subject: Chapter 7

Went in for a consultation for chapter 7 but new questions arise after the consultation.
1. Been in SC for a year now planning on moving back to GA in a couple of months. Should I go ahead and file it now in SC or wait?
2. The lawyer told me to list my assets. Do I have to list my furniture/TV(I do not want to lose it)?
3. The lawyer also told me something about Chapter 722(something about car loan) do you know what kind of car I can get?
4. Should I file taxes before or after I file?
5. If I do list assets will a trustee actually come out to see it?
1. You would need to still file in SC for 90 days after you move.
2. List all assets, and your attorney will use the state exemptions to protect your assets so that you can keep them.
3. 722 is where you can buy your car for fair market value as opposed to paying off the balance of the loan. They can help you finance something after bankruptcy too.
4. Check with your attorney to see what portion of the refund may be protected.
5. Rarely does a trustee investigate assets. You sign the papers under oath, so be sure to list all of your assets.

Subject: chapter 13

I have about 22,000 in unsecured debt. All very high interest rates (cc's and 3 personal loans). I tried consolidating part of my debt into a personal loan of 10,000 6 months ago. The consolidated loan is 24% revolving and in 6 months i only managed to bring down the total 100.00 dollars, and now I am even farther in debt and can't make ends meet. My minimum payments are 700 dollars monthly. I make 37,000 a year and own my home and don't want to lose it. I will need a care within 3-5 years. If I take the chapter 13 route, what would I expect to lower my payments too monthly and will the recent 10,000 unsecured loan (it was deposited in my account, however no luxuries were purchased with it, it was used for repayment of personal debt), affect my filing. I can't go on like this, I can not even barely make these payments of 700.00. I live in PA.
With Chapter 13, you would pay back anywhere from 10-100% depending on your income, and depending on your assets. You would pay this debt back with little to no interest. Speak with a local PA bankruptcy attorney to find out the exact percentage of repayment based on your individual situation.

Subject: Chapter 7


I have filed Chapter 7 and included my home (in Georgia). The mortgage attorney has a court date of January 31, 2008 for a motion of relief from stay. Will I be notified as to how soon I need to vacate the property or approximately how long will I have left to remain on property? I asked my attorney and was told 2-3 months after filing date. I just wanted to see if I could get a more definite time frame. Thank you in advance.
Once the stay is modified, the lender will start the foreclosure process. Foreclosures can be up to 9 months, depending on the case and the jurisdiction you live in. You would have a bit of time to stay in the property and to find alternate living arrangements. The bankruptcy will eliminate the balance owed on the mortgage.