Los Angeles Bankruptcy Blog

Qualifying for Chapter 7 BK: Means Test numbers to Change in March 2010

The Department of Justice announced today that the numbers used for the Means Test will be adjusted next month. It is conceivable that someone could qualify for Chapter 7 bankruptcy in February and not after the figures that are part of the bankruptcy reform take effect in March 2010. Timing is everything in Means Testing and qualifying for a Chapter 7 … if it’s possible at all for your situation.

2010 02 02

Obama 2nd Mortgage Plan Still Not Launched After 9 Months

The Huffington Post reports that a mortgage program announced in April 2009 hasn’t officially launched yet.

The program, a component of the administration’s $75 billion Making Home Affordable effort, was supposed to attack second-lien mortgages, which are additional, second mortgages taken out on a home on top of the initial first mortgage. It’s like taking out two loans to pay the same debt.

The Second Lien Program is supposed to automatically reduce the payments on a second mortgage when the first mortgage is modified under the administration’s loan modification effort, the Home Affordable Modification Program. The administration says that by lowering monthly mortgage payments, HAMP will eventually help up to four million homeowners

This is a frustrating point for me and other Los Angeles bankruptcy lawyers. Homeowners come into my office and express their extreme frustration at trying to get some of the relief which was promised and, in fact, passed through Congress and signed into law. Yet, many mortgage companies are being very stingy with the cash, stringing mortgage holders along for months, requesting more and more docs, and then still denying any assistance. Finally, after exhausting all their options, homeowners then pay a visit to their local bankruptcy attorneys.

At least in Chapter 13 bankruptcy, we can strip a second mortgage and eliminate the 2nd mortgage and lien entirely. If only they would allow bk lawyers to amend first mortgages the same way.

2010 01 11

1_Articles
2_News
Foreclosure

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Judge wipes out couple’s mortgage

In New York, a judge decided to cancel the mortgage of a Long Island homeowner because the mortgage lender wasn’t working with the borrower.

We agree that this is a dangerous precedent, and that we can’t have judges wiping out contracts willy-nilly. However, there is a proper venue and forum for mortgage adjustments, and that is in bankruptcy court.

The United States Bankruptcy Code already has provisions for eliminating or reducing mortgages. With the elimination of a little phrase, bankruptcy judges can have the freedom to reduce mortgages to the value of the home. This way it stays structured and analogous to current laws as written by Congress, and not as arbitrary as what happened in New York.

2009 11 28

2_News
Foreclosure
Mortgage Cramdown

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California Homestead Exemptions Increase

You can protect more of your home’s equity, starting on January 1, 2010. This means that instead of protecting $50,000 and $75,000 of your home’s equity when you file bankruptcy if single or married (respectively), now you can save more when you file bankruptcy. Starting with the new year, you’ll be able to protect $75,000 and $100,000 of home equity for single and married debtors.

Of course, the irony is, fewer people have home equity in this sinking California home market. However, when the real estate market recovers, hopefully the law changes in California homestead exemptions will remain permanent.

2009 10 21

2_News
Chapter 7 Bankruptcy

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Homebuyer Handout: Cash for Clunkers for Casas?

Barrons has a blurb about how $21,000 handout for houses could take the failed Cash for Clunkers program to a new level.

As with the clunker cash, Uncle Sam is giving money to folks to do what they would have done anyway. Cash for clunkers temporarily juiced auto sales in August, but they fell back to their previous, depressed pace in September. And some 85% of the subsidy was pocketed by the dealers, not car buyers, according to one estimate

More expensive than you think. And do we need to punish good behavior and reward bad? And finally, with home prices low, interest rates low, why do we need to give further incentive? If people have the capital and credit to buy, they’ll buy now without further prodding.

2009 10 21

2_News
Consumer Finance

Credit Card Fee: Pay Off your Balances

There are new credit card laws supposedly to protect the consumer from the credit cards. You know all the things you’re supposed to do in order to manage your finances. Dealing with high interest rates is not one of them. Therefore, you want to keep your balances on your credit cards low, and use them for convenience.

However, Bank of America and Citi has announced that in 2010 they will charge you a fee even if you pay off your balance each month. Why? The new credit card law is making it harder for the credit cards to jack up interest rates or minimum balances due. So, they’re scrounging around for new ways to raise income.

What this ultimately leads to is that those who are paying their bills on time and doing everything right end up paying more. It’s hardly fair to punish good behavior.

2009 10 21

2_News
Credit Cards
Consumer Finance

How do I Calculate my Chapter 13 Bankruptcy Plan Payment?

As a Los Angeles bankruptcy attorney, I take great interest in your post about Chapter 13 bankruptcy plan payments. You’re right that it’s an extremely budget-intensive exercise. Priority debt and arrearages can complicate matters. Ditto for a liquidation analysis. Does a Chapter 7, after factoring in allowable exemptions allow greater distribution than the Chapter 13 does?

Complicating this further is not just different interpretations between circuits, but also even within circuits. In the Ninth Circuit, In re: Kagenveama is interpreted differently from district to district. In the Central District, it’s a way of shortening the term in some situations from sixty months. However, in the Eastern District, the same case is interpreted to emphasize the B22 and the projected disposable income. In other words, depending what your zip code is, in one place your plan payment is based on Schedules I and J, but the neighboring county ignores your actual budget and what you can afford. Instead, the focus is on the result of the B22 form.

It’s our hope that the U.S. Supreme Court will grant cert. to a case like Lanning and make a clear statement about uniformity between circuits and divisions so that the budget — Schedule I minus Schedule J — is the law of the land and truly determinative of the plan payment. A plan payment
based in reality, upon true income subtracting out reasonable deductions and expenses.

(Still, it’s better than debt consolidation.)

2009 10 04

1_Articles
File Bankruptcy
Chapter 13 Bankruptcy

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Unemployment rises to almost ten percent

It seems we’re at 9.8 percent unemployment.

Or, put differently, we lost over a quarter-million jobs last month.

If you’re having a tough time, you’re not alone. From the people I talk to in my office, many more are being forced to take pay cuts or even furloughs.

Hang in there.

UPDATE: Because many people are taking early retirement or disability, it seems the numbers are worse than initially reported.

2009 10 02

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Job Seekers exceed Job Openings by Record Ratio

Are things getting better? By one measure — jobs — they’re getting worse. More people, as a percentage, are looking for jobs that don’t exist than ever before.

2009 09 27

California Unemployment Rate at Record High

News out today from Bloomberg shows that California has reached record highs in joblessness. The current unemployment rate in the Golden State is now 12.2%.

Nationally, the unemployment rate is at a 26-year high in August, at 9.7%.

2009 09 18

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Los Angeles Bankruptcy - Twitter!

Follow us on Twitter - http://twitter.com/labankruptcy

2009 09 03

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Cayman Islands might file bankruptcy

Cayman Islands might file bankruptcy.

2009 09 03

3_Observations
2_News
File Bankruptcy

Foreclosure Relief Scams

Another story today about how these companies that are popping up all over the place to provide “foreclosure relief” only lead to people losing their home.

Not to mention a few thousand dollars.

There is a lot of buzz about loan modifications today where people are hopeful that they can just reduce their mortgage payment by hiring a company. You’re best off bugging your own mortgage company yourself.

Paying an outside “relief” outfit to do what you can and should be doing yourself can only lead to heartbreak and frustration. If you are supposedly hiring a foreclosure relief attorney — which is how they justify getting paid the big bucks up front — you have the right to speak to your attorney face-to-face.

If you don’t meet a foreclosure lawyer in person and across a desk, it’s a major red flag and time to hold your wallet.

Ask questions. How many people — with your mortgage lender — has this outfit helped with loss mitigation and loan modification? Get names. Call these people. Check out their stories.

How long did the process take? Months? Was a foreclosure auction sale date part of these other supposedly successful loanmods? How many days before the sale date was it averted? Do you feel like playing “Chicken” with your mortgage company, who is determined to sell your house to someone — anyone — who will make the payments on time?

Bottom line: be wary of hiring an outside firm to change your home loan. You’re best off bugging your own mortgage company and filling out all their paperwork. But be realistic, patient and persistent. At some point, if you really can’t afford the loan balance because the principal is just too big that no reasonable monthly payment can ever pay it off, look at the bright side… once you move out and rent, you’ll be able to save a lot of money.

Not just money on reasonable rent. Money that you didn’t throw away to a crook who is just another predatory mortgage ripoff company.

2009 08 30

1_Articles
Foreclosure

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Holy unsecured! Judge Tighe rules on Chapter 13 Lam issue

Professor Hayes blogs about an anticipated ruling from Bankruptcy Judge Maureen Tighe on the issue of what happens to the unsecured portion of a home loan where the second mortgage is stripped away.

The issue is this: when a home is underwater and the second mortgage is “wholly unsecured,” we can remove your second mortgage. You don’t pay it anymore. You recover equity. This is a good thing.

Problem is, there are limits to how much debt you can have in certain kinds of bankruptcy. And if the home loan now counts as credit card debt, this can put you over a limit. This was the open issue: does it? Or is it really as of the date of filing?

Judge Tighe held that since it’s likely to be stripped, it counts in the unsecured portion. So, depending on how underwater you are, you could run into debt limits and eligibility problems.

See a Los Angeles bankruptcy lawyer before you make your first move.

2009 08 19

1_Articles
2_News
File Bankruptcy
Chapter 13 Bankruptcy
Foreclosure

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Loan Modification Myths

With my recent article about loan modifications, this blog post re: the top loanmod myths from a real estate attorney more or less backs up everything I had said. Do it yourself, and be persistent. With luck (yes, luck — it’s not your right to change a contract you entered into willingly), you can get a loan modification.

2009 08 16

Foreclosure
Bankruptcy Myths and FAQs

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