Bankruptcy modifies the collection of all kinds of debt.

by Andy Miofsky,

Do you receive late notices and collection letters in the mail? You
probably opened them at first, but now do you just throw them in an
unopened pile, hoping to deal with them later – and later never comes?

Are you tired of explaining why you have not paid a bill, embarrassed
telling complete strangers your personal tragedies? Millions of
people behind in their bills do not look forward to opening the mail,
answering a phone or speaking to bill collectors.

Did you know you could modify the way all your debt is collected?
Yes, all your debt. 11 U.S.C. 362.

Did you know Congress passed a law that lets you eliminate entire
categories of debt? 11 U.S.C.727, 1141, 1328.

Isn't it time you started getting some Happy Mail?

At the first moment you file bankruptcy you automatically obtain
relief that modifies the way your creditors treat you. With few
exceptions, all collection activity must stop, all mail and phone
calls must stop and creditors must change the way they try to get
money from you.

Debt collectors are no longer permitted to contact you by telephone
while you are represented in a bankruptcy case. Peace of mind and
calm are restored to your life.

Student loans, mortgage companies, car title lenders, medical bills,
taxes, and credit cards debts are all included and are all covered by
the automatic stay when you file bankruptcy. Bankruptcy requires
creditors present their debt to the court for payment and only debt
you can afford to pay gets paid during your case. Many other debts
are discharged.

Some exceptional debt survives bankruptcy and may be collected from
you in the future. Hopefully after the bankruptcy case has shed you
from having to pay other debt you can be in happier place and able to
deal with the remaining bills.

For more information on these matters, please call our office at 305
548 5020, option 1.

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Change Your Chapter 13 Bankruptcy Payment

by L. Jed Berliner

Yes, Virginia, you CAN change your Chapter 13 bankruptcy payment if
something changes in your situation.

Chapter 13 requires a monthly payment from three to five years. It
allow you to cure arrearages for mortgages, car loans, taxes, or
family support, or pay what you are required to pay under the Means
Test. A portion of the money may go to general creditors, like credit
cards.

There's a common fear that those payment is written in stone for the
full length of your case. That's just not true.

Any decrease in income or increase in expenses can support a modified
or amended plan where you pay less. Lower income could result from a
cut in pay or change of jobs, or increased costs for work benefits
such as health insurance. Increased expenses might result from car
maintenance for a car as it gets older, or raising a child as the
child gets older, or a medical condition or simply an increase in
medical co-payments.

If you need to pay a fixed amount to cure a certain arrears, then
perhaps you can pay less for a longer time up to the five year maximum
and achieve that cure.

The payment can end entirely with a Chapter 13 hardship discharge or
conversion to Chapter 7, but you do not get the benefit of curing a
loan's arrears if the cure is not completely paid.

Some jurisdictions allow a suspension of the payment in the event of
a short term problem, like changing jobs or moving or a sudden and
large medical or repair expense. Under a suspension, the total of all
payments does not change and the extended payments can never exceed
the five year maximum.

Here's my point. You file a Chapter 13 case for whatever the reason
is. Don't be afraid of being stuck with the original payment. The
payment can change if your situation changes.

Jed Berliner is a Massachusetts bankruptcy and foreclosure defense attorney.

For more information on these matters, please call our office at 305 548 5020.

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Private Student Loan Bankruptcy Fairness Act of 2011

by Nicholas Ortiz,

Last year U.S. Representative Steve Cohen of the Ninth District of
Tennessee introduced a bill called the Private Student Loan Bankruptcy
Fairness Act of 2011. The bill would make private student loans
generally dischargeable in bankruptcy as a way of addressing the
mounting student debt crisis that many have written about. The bill
was referred to a subcommittee in July 2011, and there it still sits
awaiting further action. So, I called the Congressman Cohen's office
today, and he responded by email with the following comment:

"Although I held hearings and marked up the Private Student Loan
Bankruptcy Fairness Act when I was Chairman of the Commercial and
Administrative Law Subcommittee last Congress, the Republican
leadership of the Judiciary Committee has not shown any interest in
moving the bill forward in this Congress. Thanks to the recent report
by NACBA, President Obama's efforts to address the student loan debt
crisis, and other press reports about the crushing student loan debt
burden, we are continuing to bring attention to the bill and gaining
additional cosponsors. I am hopeful that we will ultimately be able to
pass the bill, particularly if control of the House changes hands
again."

This is where the bill stands as of February, 2012. Movement is
unlikely until after 2013 when the new Congress begins after the
November 2012 elections. The bill only has a chance of emerging from
committee if the democrats retake the House. I'll try to stay on top
of the bill and update the information here or on my student loan
blog.

For more information on these matters, please call our office at 305
548 5020, option 1.

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Bankruptcy Credit Counseling for just $5

by Kent Anderson,

Consumer Bankruptcy Counseling is now available for $5 from the
website: www.consumerbankruptcycounseling.info. In 2005, Congress
required all individuals wishing to file bankruptcy to first undergo a
"Credit Counseling Briefing." This counseling session is supervised by
the office of the US Trustee and must be completed within six months
prior to the bankruptcy petition date. Credit counseling is supposed
to be done by an approved non-profit agency but can be conducted
online over the Internet.

Bankruptcy credit counseling takes about an hour and is now a
primarily automated process. The standard fee charged by most
authorized credit counselors is between $30 and $50. "Nonprofit"
credit counseling has become a big business with agencies competing
with each other for business from bankruptcy lawyers. Promotional
gifts are given out at bankruptcy lawyer conferences and parties are
sponsored to curry favor with lawyers to seek client referrals.

Credit counseling itself is an enormous waste of both money and time.
It is often described as a "speed bump" in the road to bankruptcy
relief. In the more than six years since the implementation of this
requirement I have not had a single client change their mind about a
bankruptcy filing due to the credit counseling they attended.
However, they have spent thousands of dollars paying for this
worthless and wasteful "service."

The Tides Center, a non-profit organized in the California Bay area,
is now providing this service to all who need it. The $5 cost is
charged to help fund the program and to overcome skepticism that arose
when the program was initially proposed without charge. The low cost
does come with some minor delay in issuance of the required
certificate. They do not provide same day service and there are no
operators "standing by" on a toll free line to handle technical
problems. However, after using the service for a few months now, my
office has experienced no unexpected problems and there are no client
complaints about the price.

For more information on these matters, please call our office at 305
548 5020, option 1.

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Chapter 13 Bankruptcy Time Bomb: Mortgage Modification

One of the major benefits of Chapter 13 Bankruptcy is the ability to
avoid second mortgages that are not secured by any value in your home.
 By following standards outlined in the Banrkuptcy Code, you can
reclassify that loan on your home into the same category as credit
cards or other ordinary bills and discharge them at the end of your
Chapter 13 payment plan.  This is called lien stripping. You cannot do
this to a mortgage in a Chapter 7 case.

However, if there is even a penny of value in the home that would go
to a second mortgage when the property was sold, the loan cannot be
valued as unsecured.  That means it must be paid during the Chapter 13
case and it also survives the Chapter 13 as a lien on the property
until it s paid off.

So where's the Time Bomb?  Let's assume that you've been dealing with
your lender trying to work out a modification of your first mortgage.
Well, what if your lender were to give you a modification that reduces
your principal balance?  That modification now results in a little
equity in your home.  Sounds like good news, right?  Nope.  With the
reduction in the principal balance gives your second mortgage a
toe-hold onto your home. Once that happens, the Bankruptcy Code will
not allow you to avoid that second mortgage and gain the benefit of a
Chapter 13 case.

In a New York Times article, reporter Gretchen Morgenson criticized
the terms of the "Great Mortgage Deal" with five major banks,  Once of
the points she brings out is that this "settlement" enhances the value
of the second mortgage market.  By creating equity in homes, the value
is now exposed to claims by second mortgage holders in a Chapter 13
thus weighing down homeowners with yet another obligation that
survives a bankruptcy.  Once your first mortgage is reduced below the
value of your home, the second mortgage will sink its claws into that
home.  KABOOM!  Mortgage time bomb.

If there is any doubt that you should file a Chapter 13 Bankruptcy
before you work our a debt reduction deal with your first mortgage,
this should do it.  File first, work out the modification later,
before that second mortgage gets you.

For more information on these matters, please call our office at 305 548 5020.

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Trillion Dollar Student Loan Industry Exempt From Bankruptcy

by Kent Anderson,

In 2010, the annual volume of new student loans reached 100 billion
dollars. There is now more than a trillion dollars in student loan
debt on the books and this type of debt is growing rapidly. A new
economic crisis is about to emerge. Student loan debt cannot be
discharged in bankruptcy except under the most extreme of
circumstances. It is not only government-sponsored or guaranteed
student loans that are exempt from bankruptcy discharge. Bank loans
made to students, and relatives or friends who guarantee those loans,
are facing discharge problems when the debt carries that "magic"
designation as an "educational loan."

For more information on these matters, please call our office at 305
548 5020, option 1.

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Myth Busted: Most Can Afford A Chapter 13 Plan

by Craig Andresen

One of the most stubborn myths about bankruptcy is the one which says
that chapter 13 requires full payment of all your debts over 60
months. If true, this would indeed rule out chapter 13 for most
consumers. After all, what good would come from being granted 60
months to pay off all your debts? If you can't afford your payments
now, how in the world could you afford your payments if you had only
60 months to pay them? This myth about paying your debts in full in
chapter 13 is, happily, only a myth.

In fact, the law says something quite different: in chapter 13, your
monthly plan payment is based on what you can afford. Then, and at
the end of the chapter 13 case (either 36 or 60 months), all the
remaining balances on your debts are wiped out, just like in chapter
7.

You might wonder how that can be fair to your creditors, but the
answer is easy, and the law gives it full recognition – your creditors
were slated to get absolutely no payment in a chapter 7, weren't they?
So how could it be unfair to pay them a dividend consisting of what
you can offord, in a chapter 13? This is especially true when the law
requires that you pay what you can afford into your chapter 13 plan,
after paying all your reasonable monthly living expenses.

And no, there isn't any catch-22 lurking in chapter 13. Congress
would not have bothered to enact chapter 13 if you had to pay more
than you could afford as a monthly payment, because no one would be
ever file chapter 13 if that were so. Also, lawyers wouldn't steer
clients into chapter 13 if the monthly payments were not possible for
clients living in the real world to pay.

So think about it — maybe chapter 13 wouldn't be such a bad idea for
you after all. There's no means test to worry about, you can get rid
of more debts in a chapter 13, and your case is often subject to less
scrutiny by creditors than a case under chapter 7. And whatever your
reason for choosing chapter 13, you can be sure it will solve your
debt problems just as effectively as a chapter 7.

For more information on these matters, please call our office at 305 548 5020.

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The World’s Worst Ever Sellout – Is Your State In?

by Kurt O'Keefe

Over 40 states have already signed on to the sellout deal the corrupt
politicians negotiated, so they could run for office beating their
chests bragging about their tremendous accomplishment, with their
mortgage company liege lords, who should have already started their
prison terms, to get them off the hook for the greatest financial
crimes in our history.

Just in case you wonder where I stand.

The Monday, February 6 deadline passed with some states still on the
fence, including the big one, California.

There are holdouts to the sellout: New York Attorney General Eric
Schneiderman chief among those opposing the foreclosure settlement.

Though his resolve could be weakening:

"Schneiderman said Jan. 27 that the liability releases in the draft
settlement had become narrow enough so that a full investigation by a
new mortgage crisis unit that he will help lead could move forward."
(from the Hufifngton Post article linked to above)

Schneiderman was appointed to the Residential Mortgage-Backed
Securities Working Group by the White House, which continued the
pattern of our prior President in appointing the mortgage crooks (one
of them pictured below)

Image by: Dreamstime

to government office, instead of prosecuting them.

Some of us think the commission is toothless, an election year ploy to
make it look like something will happen; a commission with more
mortgage industry representatives than consumer advocates.

I and others have written about the real solution to the foreclosure
crisis, judicial mortgage cramdown in Chapter 13 cases, allowing the
courts to cram-down the amount of the mortgage to the value of the
home, and to change the interest rate and length of the loan.

But the bad guys seem to have purchased both political parties, so
that died was killed by the Senate.

That is how to deal with the mess on the ground. It is equally
essential to punish the wrongdoers, or we just set ourselves up again
for another disaster down the road.

For more information on these matters, please call our office at 305
548 5020, option 1.

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