Bankruptcy law allows the modification of a mobile home loan in Chapter 13, the Eighth Circuit Bankruptcy Appellate Panel ruled this week. The 2005 amendments to bankruptcy law did not add mobile homes to real estate mortgages which are generally protected from modification.

Chapter 13 generally allows a person to modify the repayment owed to a secured lender down to the value of the collateral. This is called a “cramdown” and the goal is to allow the consumer to retain the collateral while giving the lender the value they would be entitled to if they recovered their property and sold it. And it also increases the chances that other creditors can be repaid more. Read the rest

Listing your house for sale at the same time that you are filing for bankruptcy involves a number of issues, and the answer to the question is a case by case basis. Can you do it? Probably. Should you do it? That needs to be answered by an attorney in your area.

Your bankruptcy attorney can help you get approval for the sale if an offer comes through. In order to get bankruptcy court approval to sell the property, a motion must be filed with the court since you can’t sell it without court permission. Read the rest

There are many posts in these pages and on Mortgage Law Network about the types of foreclosures and the fact that a bankruptcy filing can stop the process.  But what happens then?  Just because in most states a bankruptcy stops a foreclosure (but see Gene Melchionne’s article on Connecticut foreclosures), it doesn’t end it.

The foreclosure process, in spite of the bankruptcy often continues.  When a bankruptcy is filed, however, the automatic a stay that is created will stop any further proceeding.  The stay lasts until one of two things happens: the bankruptcy ends by discharge or dismissal, or the creditor (mortgage company) gets the court to grant them relief from the stay to go forward.

There is a provision of the bankruptcy code (11 USC §362(d)(3)), however, that if the property is needed for an effective reorganization of the debtor in a chapter 13 bankruptcy, and the debtor is able to make normal monthly payments than the mortgage company can’t foreclose.  But the filing of a chapter 13 doesn’t end the foreclosure process – it merely stops it.  The mortgage company, if notice of sale has already been filed, can appear at the time and place of sale and continue it to another date to see if the bankruptcy has been dismissed by then.  And, unless you were present when the change in sale dates was announced, they don’t have to tell you when or where the next sale is scheduled.

When that continued sale date comes around, if the chapter 13 is still in place, the sale can’t go forward, but the sale can be moved yet again.  The mortgage company can continue to move the sale date forward waiting to see what happens in the bankruptcy.  In fact, they can do this for a year in California before having to cancel the sale altogether.

I guess the good news is that after a year, the mortgage company would have to send new notices of a sale if it wanted to go forward.

Student Loans are generally not dischargeable in bankruptcy, and there is no statue of limitations on their collection. This makes it very difficult to get away from a student loan, and now it appears that the bar has been raised and it is even harder to receive a hardship discharge from a student loan in the 4th Circuit bankruptcy courts.

Read the rest

A topic that has been written about on this site on several occasions is the risk a client runs by failing to disclose all of his assets to his attorney when filing a bankruptcy.  In articles by Jill Michaux, Chip Parker and Susan Robicsek these risks are discussed,   However the risk of being denied a discharge in bankruptcy cannot be overstated.

If a debtor fails to disclose an asset and a Court determines that the failure to disclose the asset had a material impact on the bankruptcy, the Court can deny the debtor his discharge.

I share the concern of my colleagues about these disclosure issues.  So when a potential client asks me:  “Do I have to disclose my stash to the bankruptcy court?” my answer is:  “Yes, you have to disclose your stash!”

In the case of Fokkena, Trustee, v. George & Rose Tripp, 224 B.R. 95 (USBC, N.D. Iowa, August 3, 1998) the debtors were arrested and charged with the manufacture and possession of marijuana a few weeks after filing their Chapter 7 bankruptcy.  The debtors did not disclose the fact that they owned marijuana on their bankruptcy schedules. Read the rest

Toby Mac’s Lose My Soul was the inspiration for my article of Don’t let your debt own you! that I wrote earlier today.  The article is about gaining your quality of life back and breaking the debt ties that bind and control the very essence of your being. Read the rest

The hobby horse I was all set to ride today has to do with the pay stubs that I have to collect from my clients prior to filing any bankruptcy case.  I’ll get to that later.  I got sidetracked when I did a search to see if any of my colleagues had recently written on the same topic–we don’t want to bore you with the same harangue every time you log on.  What came up instead was one of my own posts, Top Ten Wastes of Time After BAPCPA, written some time ago.  So I read it again, to see if anything had changed, hopefully for the better.  Alas, no, I’m still wasting my time on those same things, including this one, which was number five on my hit parade: Read the rest

Although most persons filing bankruptcy will opt to use chapter 13 to stop a mortgage foreclosure, it’s important to remember that filing bankruptcy under any chapter, including chapter 7, stops a foreclosure just as effectively.  Chapter 7 not only stops a mortgage foreclosure, but it usually results in the discharge of almost all unsecured debts, without the necessity of committing to a years-long chapter 13 debt repayment plan.  This makes chapter 7 an attractive option for those facing foreclosure, but lacking the income needed to propose a feasible chapter 13 plan.

While the filing of a chapter 7 bankruptcy case stops a mortgage foreclosure, it does not provide a long-term solution to the problem of how to catch up on past due home mortgage payments.  Even though chapter 7 stops the foreclosure, the effect is only temporary.  In most federal court districts the delay of foreclosure proceedings obtained through chapter 7 consists of only about two to six months.  To avoid the foreclosure process being started all over again after filing chapter 7, the past due mortgage payments must be caught up soon after filing the case in bankruptcy court. Read the rest

A Chapter 7 Discharge and a Chapter 7 Final Decree don’t necessarily come at the same time, although they often do if a case is a no asset Chapter 7 case. When a Chapter 7 bankruptcy case is filed, the debtor is asking to be released from the legal obligation to pay his/her debts - in legal terms to receive a discharge.  The debtor’s discharge and the final decree that closes the case are independent actions by the court that don’t always occur at the same time.

All the property of the debtor, except what the debtor can exempt (protect from creditors), becomes property of the bankruptcy estate, and is controlled by the Chapter 7 bankruptcy Trustee. If all of the debtor’s property is exempt, a final decree may be issued simultaneously with the discharge. However their case may remain open for a long time while creditors receive a distribution of money if there was non-exempt property.

The discharge is usually entered just a few months after filing, and the debtor is able to move forward with his life. The bankruptcy estate will remain open as long as it takes for the Trustee to liquidate the non-exempt property, distribute the funds to creditors, and file a final report. When all the assets are dealt with, the Final Decree is issued and the case closed.

See also:

Word Of The Week: Discharge August 10, 2008 by Eugene Mechionne CT Bankruptcy Lawyer

What Property Can I Keep If I File Bankruptcy? March 11, 2007 by Susanne Robicsek, Charlotte NC Bankruptcy Lawyer

What Property Is Exempt (Protected) In North Carolina? March 12, 2007 by Susanne Robicsek, Charlotte NC Bankruptcy Lawyer

What Debts Survive My Bankruptcy? June 10, 2008 by Karen Oakes, Oregon Bankruptcy Lawyer

Bankruptcy Discharge And Debts Incurred By Fraud April 19, 2008 by Cathy Moran, CA Bay Area Bankruptcy Lawyer