Archive for December, 2009
Friday, December 18th, 2009
Once you file a Chapter 13 bankruptcy and begin contributing monthly to the payment plan, you may wonder where your money is going, who’s being paid and how much money you still owe until you get your Chapter 13 discharge. As a Chapter 13 debtor, you can have access to much of the same information that the Trustee and your attorney have.
The National Data Center allows Chapter 13 debtors to access their case at no charge through its website: www.13datacenter.com. In order to view your case on-line, you must first register for a user name and password. Just go to the www.13datacenter.com website and locate the box that asks for User Name and Password. If you are a new user, click the link “New Debtor Access – CLICK HERE” to register for a user name and password.
Step 1: You will be asked a series of questions to verify your identity. Make sure to enter your name exactly as it appears on your petition, your social security number and your case number.
Step 2: Once you’ve entered all information requested in the first screen, you will be taken to the second screen. Select one of the creditor names listed, which must also be one of the creditors included in your Chapter 13 petition. Select your correct mailing address (NOT the address of the creditor). Finally, select the name of the Trustee that has been assigned to your case.
Step 3: Once the second screen is submitted, you’ll be taken to the third screen. Here you will be able to choose your own username and password, as well as enter your email address.
Once you’ve completed Steps 1 – 3 of the registration process, you will receive an email with your username/password and will be automatically re-directed to the National Data Center homepage. Log-in using your username and password and freely navigate the National Data Center website to view your case on-line and keep tabs on where the money is going.
Post by Susan Blum.
Posted in Chapter 13 data center, Chapter 13 issues, General consumer bankruptcy info, chapter 13 didbursments, chapter 13 plan | Comments Off
Thursday, December 17th, 2009
Late last week, the U.S. House of Representatives voted to approve a bill that introduces a spate of consumer protection measures.
The amendment that would have permitted homeowners to address foreclosure in bankruptcy by altering the terms of mortgage loans (in what’s known as “cramdowns”), though, did not make the cut.
Provisions of the Bill
The Wall Street Reform and Consumer Protection Act, as it’s known, includes the following provisions:
- Mortgage lending reform: The bill would outlaw the type of predatory lending that allowed for the subprime boom and subsequent bust. Essentially, the bill requires mortgage lenders to lend only what their borrowers can repay.
- Increased consumer protection: It creates the Consumer Financial Protection Agency, a government group proposed earlier this year whose job would be to protect Americans from unfair financial practices and fraud of all stripes.
- Amped up oversight: The Financial Stability Council, another provision of this bill, would identify firms that are intrinsically risky and increase monitoring and oversight of these to prevent widespread financial crises.
- Bailout replacement: If this bill becomes law, taxpayer bailouts will be a thing of the past, because it includes orderly measures for closing firms that are “too big to fail.”
- Limits on executive pay: In addition to giving regulators an opportunity to halt what seem to be questionable payment policies, the bill would give shareholders a chance to weigh in on the salaries and retirement packages of a firm’s executives.
- Increased investor protections: The bill would increase the power of the Security and Exchange Commission (SEC) and mandate an examination of the securities industry to determine what reforms are needed.
- Regulations on derivatives: All-new regulations would be instituted for the derivatives market, which reportedly has a value of at least $600 billion.
- Hedge fund registration: Those who run hedge funds would have to register with the SEC and comply with regulatory guidelines to minimize risk for investors.
What Happens Now?
At this point, the bill will move on to the Senate, where it could be modified before becoming law, perhaps with a new bankruptcy amendment.
But, in the words of Speaker Nancy Pelosi, the bill “sends a message” to Wall Street and consumers about a new era of protection.
Additional Resources
Full Text of HR 4713 (PDF)
Posted in Bankruptcy, Consumer Protection, Legal Info, forelcosure, laws | Comments Off
Wednesday, December 16th, 2009
Between 2003 and 2009, the number of fraud cases investigated by the U.S. Justice Department saw a steep decline—including a 44% drop in bankruptcy fraud cases, according to an article in USA Today.
Bankruptcy fraud, corporate fraud and securities fraud cases all received less attention from Federal prosecutors, according to Justice Department documents, with corporate fraud cases falling 55%, even as our country fell into economic crisis.
And while the number of new fraud cases filed in federal courts has increased over the past few months as investigators struggle to prevent another financial mess, the case load is still lighter than it was at the beginning of the decade.
What is Bankruptcy Fraud?
Bankruptcy fraud is a federal felony offense that may include concealment of assets or debts from the bankruptcy petition. Failure to include an asset when filing bankruptcy is one of the most forms of bankruptcy fraud, and often includes "giving" a valuable asset, such as a car, to a relative or friend to protect it from liquidation.
If a debtor has transferred or sold any property within two years of filing bankruptcy, such property may be taken by the bankruptcy trustee as an asset.
According to the USA Today article, the Justice Department filed only 82 charges of bankruptcy fraud in the fiscal year ending September 20, 2009—despite nearly 1.5 million bankruptcies being filed in that time.
Posted in Justice Department, Legal Info, asset, bankruptcy fraud | Comments Off
Wednesday, December 16th, 2009
hearthealth1 asked: I just moved from VA to FL and I need to file bankruptcy, does anyone know when I can do so? I had an over the phone consultation with a bankruptcy attorney’s office (not the attorney) and was told that because of my length of residency in FL I’m not able to file yet. Is this true?
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Posted in Personal Finance | 1 Comment »
Tuesday, December 15th, 2009
In a recent report from CNNWorld, Columbian-born pop singer Shakira declares that her family’s bankruptcy when she was a child motivated her to become the successful, world-famous pop star she is today.
In addition to having recorded record-breaking number of worldwide hits and a wildly successful career as a musical entertainer, Shakira founded the Barefoot Foundation, a charity that helps promote and fund education for poor children in Columbia, where she grew up.
Bankruptcy as a New Beginning
In the article, Sharkia shares her family's experience with debt, including having to sell all of their furniture. However, her parents wanted their young daughter to know that bankruptcy wasn't the worst position to be in. Shakira’s experience provides one example about what bankruptcy can and cannot do.
- It IS a chance to start over. Those of us who have or have had problems with debt don’t need to be shamed or scolded. We know we’ve messed up. Bankruptcy offers us a chance for to start from the beginning, without the onerous weight of debt holding us back.
- It IS NOT a life ruiner. Bankruptcy doesn’t ruin people’s lives. It provides a solution to an overwhelming problem. Yes, your credit will be temporarily hurt by a bankruptcy filing. But it—and you—can recover, assuming you heed the advice in the financial management course and develop a new relationship with money and credit.
- It IS a major step. Shakira tells of her parents' bankruptcy as a life-changing event. And for many people, it is. Filing bankruptcy means you have to admit you’re over your head in debt and you need help getting out. But it also means you’re ready to start again and learn from your mistakes.
- It IS NOT a scarlet letter. As Shakira shows (as well as other celebs including Larry King, Cyndi Lauper, and Abraham Lincoln), bankruptcy does not brand you for life. In fact, if you’ve got the right attitude, it can provide motivation to improve your finances and strive to reach other goals, as well.
True, most of us won’t become Shakiras or Abe Lincolns. But the lesson here is valuable just the same: debt does not define us unless we let it. So, instead of looking at your financial difficulties as a dead end, see them as an opportunity to start over and reinvent yourself. I know it’s not easy, but it’s also not impossible.
Posted in Setting the Record Straight about Bankruptcy, Shakira, after bankruptcy, celebrity bankruptcy | Comments Off
Tuesday, December 15th, 2009
Editors note: In this compelling guest post, Charleston bankruptcy lawyer Russ DeMott describes what he calls "financial repression" – the tendency of honest, hardworking men and women to delay or forego bankruptcy protection because of the administrative and expense burdens added to the bankruptcy filing process by the 2005 BAPCPA changes to the bankruptcy laws.
When you meet with your bankruptcy lawyer, you’ll be given a lot of information. You’ll also be given many tasks to complete before you file your bankruptcy case.
Our new bankruptcy law, BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act), created a tremendous amount of busy work for debtors. You must complete a credit counseling session prior to filing your case, you must provide the trustee with the last tax return you filed, and you must give your bankruptcy lawyer six months’ worth of pay stubs, just to get started. There’s lots of work to be done.
Debtors are already stressed out when they come to their lawyer’s office. The law is often confusing. There are many new terms thrown around: CMI, DMI, discharge, First Meeting of Creditors, 341, 362, median income, means test, trustee, and on and on. Even if they have a lawyer who explains things well, there’s a large amount of new information to absorb.
On top of all this, they must provide their lawyer with numerous documents. Some of these are easily accessible; some are not.
In my Charleston, South Carolina bankruptcy practice, I have noticed that many clients seem worn down by this process. We regularly check on open files to notify the clients of the information we need to file their cases. Sometimes they respond, but sometimes they don’t. It’s as if they believe that if they ignore the financial mess they are in, the problems will magically disappear. They won’t, of course. In fact, they’ll continue to get worse.
I call this financial repression. Like any other repression, it delays a resolution. Whatever the problem is, it doesn’t get solved.
I know financial problems are stressful. And I also know clients feel overwhelmed and beaten down. To be honest, I hate asking my clients for many of the documents I have to request. Much of the information is, as my high school history teacher would say, merely academic. I need the information to fill in a spot on a form, even though it’s really not relevant to their financial situation.
But I didn’t make these rules. And your bankruptcy lawyer didn’t, either. Think of the process as just a bunch of hoops you must jump through. The Credit Industrial Complex, as one of my colleagues calls it, wrote much of our bankruptcy law. The goal of the new law—or at least one of its primary consequences— was to make the process expensive and miserably labor-intensive. But if you allow yourself to repress your financial problems, you will be letting your creditors win.
Roll up your sleeves, start digging for those documents, and give your lawyer what he or she asks for. The sooner you do that, the closer you are to getting the fresh start you need and deserve.
About Russ DeMott: Russell A. DeMott is a bankruptcy lawyer representing clients in Chapter 7 and Chapter 13 bankruptcy cases. He practices in Charleston, South Carolina.
Posted in BAPCPA, General consumer bankruptcy info, Pre-bankruptcy credit briefing, Russell DeMott, bankruptcy procedures | Comments Off
Tuesday, December 15th, 2009
Jo Ann LeQuang asked: a great deal of misinformation online about debt and debt solutions. It’s not so much deliberate falsification as a blurring of terminology. This may sound pretty academicafter all, who cares how terms like debt consolidation or debt settlement or debt negotiation are defined if they all get me the desired result?
The fact is that you need to know all about these things in order to choose the right option for your situation. Picking the wrong one can cost you money (the last thing you need right now), hurt your credit, and keep you stuck in debt. Picking the right one can get you out of debt.
Let’s start with the one not on the list: bankruptcy. Believe it or not, Americans have a Constitutional right to go bankrupt.
Bankruptcy is a legal proceeding. You can’t declare bankruptcy in the U.S. without getting a lawyer and judge involved. The proceeding becomes part of public record. Bankruptcy is extremely intrusive in that outsiders will now determine how your money will be divided up to pay off debt and what you must sell.
Bankruptcy offers an advantage many debtors really love. A court has the power to issue “bankruptcy protection.” You may be allowed to write off certain debts. That means some debts just go away; you are no longer obligated to pay them. Furthermore, once you have “bankruptcy protection,” bill collectors can no longer pursue you for those debts.
The problem with bankruptcy is that it all but ruins your credit. It stays on your credit report for seven years, and it has a way of cropping up even after that. It makes it very tough to get new loans or buy a house. The loans you will be able to get will be at very high rates of interest because you’ve suddenly become a high-risk borrower.
Bankruptcy will turn your life upside down. If you have secured loans (like car notes or loans to buy electronic equipment), those things can be repossessed. The court may seize or order you to sell certain assets and take the money to pay off other debts. You will be required to go to classes to learn to manage money better, sort of like financial rehab.
While bankruptcy does have its place, it is definitely the “last resort.”
Debt settlement and debt negotiation mean roughly the same thing: you or somebody representing you sits down and talks to your creditors to work out a solution.
The principle is that you work out (negotiate) a way to end (settle) your debt. You may be able to get the interest rate reduced or the terms of payment changed (such as getting a couple of months off or extending the terms of the loan). Sometimes you negotiate to try to get the balance reduced. As an example, assume you owe $10,000. You would negotiate with your creditor to try to get him to accept less, say $5,000, and mark the debt paid in full.
Why would anyone do that? The main reason a creditor will negotiate a debt is that they suspect you are flirting with bankruptcy and they are fearful that if you go bankrupt, they won’t get anything. From their viewpoint, $5,000 may be better than nothing.
Debt settlement and negotiation plans will almost assuredly make it all but impossible to get future loans at reasonable interest (if at all).
A debt management plan (DMP) is a formal plan where you hand your problem off to a company which then negotiates your debt. You make one monthly payment to the DMP and they handle your problem.
While there are legitimate DMP programs out there, these are very treacherous waters. Do your homework and check with the Better Business Bureau as well as a certified credit counselor (nfcc.org) and maybe your bank or credit union. There are programs out there that are outright frauds and a few that are not dishonest but not exactly advantageous to the customer.
The last approach is something called debt consolidation. Ironically, many debt settlement, debt management plans, and debt negotiation companies will call their programs “debt consolidation.” That is not inaccurate, but it’s a bit misleading.
Debt consolidation simply means lumping all your debts together. In one way, that is what all debt plans do at first, whether it’s bankruptcy, a DMP, or some other program.
But pure debt consolidation involves lumping your debts together and then taking out one big loan to pay them off.
Why would anyone do that?
If you have a lot of high-interest loans, you may be able to take out lower-interest loans to pay them off. For instance, if you owe $10,000 at 22% on a credit card and you can borrow $10,000 at 10% from your bank, you would be smart to borrow $10,000 at 10% and pay off the credit card. You still owe $10,000, but you owe it at less than half the interest rate. If you keep making the same payments, you’ll pay the debt off much sooner.
If you own a house and can refinance it or get a home equity loan or second mortgage, you can use that to consolidate your debt. Let’s say all of your debts together came to $100,000 and you owed them at varying interest rates from 22% down to 10%. If you own a house and take out a second mortgage (or use another refinancing option), you can borrow $100,000 and pay off all of your debt. You can structure this second mortgage as a 30-year loan and probably get it at 7% or even lower. Now your monthly payment is significantly lower and your many loans are paid off.
Debt consolidation offers a lot of advantages. (That’s why so many programs like to call themselves debt consolidation!)
It is the only debt solution that can actually help your credit score (your credit score goes up whenever you pay off loans in full). If you are willing to take the time to learn a few things, you can do it yourself (no fees or other people to pay). It’s not intrusive; in fact, if done properly, no one would ever guess you did it. Even if your bank or a lender figured it outthey would probably think you’re smart to handle your debt that way.
If you can figure out how to do a pure debt consolidation on your own, you don’t need to bother with hiring a company (or a lawyer), entering financial rehab, or paying off agents to “manage” your money.
In the interest of fair disclosure, however, it must be stated that debt consolidation in its pure form will not work for everyone. Some people will not qualify for it. There are others who might indeed qualify for debt consolidation, but will find another plan is more to their advantage. It’s important to learn what you can to find out if debt consolidation is right for you.
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Monday, December 14th, 2009
I have been representing debtors in bankruptcy cases filed in the Northern District of Georgia for over 20 years. Until the law changed in 2005, filing bankruptcy was a fairly straightforward process – often I would meet with a client, decide whether to file and select Chapter 7 or Chapter 13, collect information about creditors, develop a budget, then file that day.
Attorney's fees and filing fees in those days were relatively low and relatively hassle free. Most Chapter 7 cases processed through to discharge, and Chapter 13 cases worked as long as the debtor remained employed and committed to making his case work.
Fast forward to October, 2005 – the time that the BAPCPA amendment to the Bankruptcy Code went into effect. The system became significantly more complicated. Clients were expected to gather page after page of documents, lawyers were charged with performing extensive budget calculations (the median income and means test).
Fees went up because both the attorney's liability and the amount of work required increased greatly. And what is the end result? Many people with limited income and no hope of paying it back are filing Chapter 7. Others who would have fit into Chapter 7 sometimes do not qualify immediately and end up having to delay their filing for a few months. Folks with some capacity to pay end up in Chapter 13, but trustees are more demanding and Chapter 13 plans that would have worked under the old law do not always work now.
Honest, hardworking men and women have to jump through hoops and pay a lot more money. In my career I can count on the fingers of one hand the number of clients or potential clients who I felt were dishonest. Those with the goal of gaming the system are not deterred. If the purpose of the BAPCPA amendments were to ferret out fraudsters, it has been a complete waste of time.
Another unintended consequence of the BAPCPA laws – deserving debtors do not seek the relief to which they are entitled because they get frustrated with all the paperwork required. Many of these folks remain in financial limbo – unable to save or psychologically move forward because of crushing debt. In a macro-economic sense I wonder if the country is better off with these folks living in financial purgatory rather than moving on with a fresh start.
My colleague, South Carolina bankruptcy lawyer Russ DeMott, and I were chatting about this tendency of deserving debtors to give up or delay filing because of the burden that the Bankruptcy Code places on debtors in terms of document production, costly credit counseling that offers marginal benefit and record keeping. Russ calls this syndrome "financial repression" and he has written a compelling and thoughful article about this problem. Russ has given me permission to republish his article on this blog, which will be the next post published here. You should also check out Russ' Charleston bankruptcy blog. Your feedback is welcomed.
Posted in BAPCPA, Chapter 13, Chapter 7, Credit Counseling, General consumer bankruptcy info, Georgia Bankruptcy, New Bankruptcy Law | Comments Off
Sunday, December 13th, 2009
GLORIA S asked: I read that ATA Airline filed two years ago and now they are doing it again.
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Posted in Personal Finance | 1 Comment »
Saturday, December 12th, 2009
Sergeant Vince Carter, USMC asked: Do the newspaper unions not have as much suction with politicians? Or are old guard newspapers allowed to fail when their products are rejected by consumers in the marketplace?
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Posted in Politics | 9 Comments »
