In the case of In re Pawson, Case No. 05-18439 (Bankr. S.D.N.Y.) Chase filed a motion for relief from stay although the debtor had substantial equity in a co-operative apartment valued at $1,000,000. Chase alleged that the debtor was two months in arrears in his mortgage payments, though the debtor showed that Chase had been rejecting the online payments he had made since filing his petition.

Chase withdrew the motion three days after the debtor’s response, and the debtor filed a cross-motion for sanctions. U.S. Bankruptcy Court Judge Martin Glenn held hearings on August 7 and 13 on the issue, and to determine the applicability of sanctions against Chase Home Finance.

In a courtroom stunner, Chase’s attorney read into the record its settlement with the debtor, which provided for a payment of $50,000 as well as various forms of non-financial relief.

Unfortunately for Chase, however, paying $50,000 wasn’t the end of the problem. The U.S. Trustee’s Office got into the picture, looking at Chase’s procedures in bankruptcy court.

Though Chase’s proposed stipulated order with the U.S. Trustee has not been posted to the court’s ECF docket, the draft form of the document is an interesting one. The stipulation specifies procedures to be followed prior to the filing of a lift-stay motion, procedures to be followed subsequent to the filing a lift-stay motion, and procedures to be followed in filing proofs of claim and objections to proposed Chapter 13 plans.

You can view Chase’s proposed settlement here.

Robin Miller is the editor of Consumer Bankruptcy Abstracts & Research (CBAR), located online at [www.cbar.pro].

© Seagrave

Before Thanksgiving, a new bankruptcy bill was introduced to the Senate. Its purpose is to help homeowners save their homes from foreclosure during bankruptcy. With an increasing number of people facing unpaid bills and debt collection, legislators are taking action.

The proposed bill must be discussed, reviewed and revised before it even goes to debate. With a new President, many feel this legislation will be passed as soon as the new year. Those facing debt collection abuse during the holiday season are looking to this legislation for much-needed relief.

The intention of the proposed bill is to, “help struggling families stay in their homes and to ensure that taxpayers are protected when the Secretary of Treasury purchases equity shares in financial institutions.”

For a long time, Supreme Court decisions terminated the ability to modify the first mortgage on a residence. In a Chapter 13 bankruptcy proceeding, first mortgages cannot be removed or modified. Only a second mortgage, or junior trust deed, can be removed in bankruptcy.

Only one exception exists under current law. People who own rental or investment properties can modify their first mortgages as well as eliminate second mortgages during bankruptcy. This offers little relief for struggling homeowners.

The new bill would give homeowners the ability to eliminate second mortgages on a residence entirely. Homeowners will also be able to reduce the principal balance of their first mortgage to reflect the fair market value of the residence. This is financial relief for those paying overinflated mortgages from the housing bubble.

Debtors would need to pass an income and expense test to qualify. The mortgage loan would be reduced to the fair market value of the property with payments spread over a 40-year period. A fixed interest rate would be charged on the mortgage.

While reforms are coming to help homeowners, they may still be several months away. If debt collection and collection abuse is dragging you down today, talk to a professional about your problems. A bankruptcy attorney will present options for greater hope and financial security in the future.

Debts that will be discharged vary depending on what chapter is applied, Section 523(a) of the Bankruptcy Code provides specific exceptions for certain types of debt. Chapters 7, 11, and 12 have 19 categories of debt that are exempt from discharge. Chapter 13 has a much shorter list of exceptions.

The most common exceptions come in the form of tax claims, debts not listed on your bankruptcy schedules (except if you filed what is called a “no-asset Chapter 7″ bankruptcy case), alimony or child support payments, debts brought about by intentional injury or property damage caused by the debtor (these are discharged in a Chapter 13, but not in Chapter 7), fines and penalties owed to government agencies, government-funded student loans, personal injury debts caused by the debtor while driving a vehicle under the influence of drugs or alcohol, debts owed to tax-advantaged pension plans, and certain cooperative housing fees.

Before filing a bankruptcy, it is important to be aware that every case is unique. Depending on the circumstances, a person may qualify for more or less debt discharge than another. Before filing for bankruptcy, a debtor should be well-versed on the specifics of his or her case.

There are a few things to be aware of should you ever find yourself being hounded because of a debt that you no longer have any legal responsibility to pay.

From time to time, a creditor will sell an account that has been discharged in bankruptcy. The new owner of the debt will then attempt to collect from you. This is clearly illegal.

When reminded that the debt was discharged in bankruptcy court, the collectors may try to tell you that the discharge does not apply to that collections agency, since they were not listed on the original court documentation. To put it simply, they are lying. They are banking that your will not know any better and simply pay the debt. To make matters worse, they will often use intimidation tactics to further confuse you, hoping to force payment.

Another tactic employed by these questionable creditors and collectors is a little sneakier. Instead of calling or sending letters, they will report the discharged debt one or all of the credit reporting bureaus. By doing this, they lower your credit score and wait for you to discover this when you apply for credit. Should you find this to be the case, it is important to notify the credit bureaus of the inaccuracy to have it removed from your credit report.

Certain creditors and collections agencies are so ruthless in their pursuit of money that they will ignore rulings of the court and try to pressure you into paying debts that you do not owe. It is important to be aware that these companies are out there and what to do if you find one of them attempting to ruin your chances for a fresh start.

Beyond the question of finding a new job, Americans are concerned about hat will happen to their pensions if their company files for bankruptcy.

Once a company files for bankruptcy, pension payments may be suspended. This does not mean that they are no longer paying people that are drawing money from their pensions. It means that the company is no longer contributing to the pension fund for current employees.

Would an employee be able to draw out of the pension if they leave the job under normal circumstances? Will bankruptcy affect the funds already in the pension plan? Those are the primary concerns of many, and rightly so.

When a company files for bankruptcy, the value of its stock generally plummets. If you have a 401(k) that is partially invested in company stock then you will not be able to avoid taking some losses. Another thing to be wary of is the possibility that the company has illegally dipped into the pension or 401(k) funds to try and stave off financial hardships. This scenario is extremely rare.

If you find that your company is on the verge of bankruptcy and you’ve considered early retirement, you don’t need to worry about your pension funds. However, it is important to understand the fees and penalties that accompany early withdrawal. Make sure you have explored all of your options before moving forward.

Almost exactly three years later, some critics are wondering if the act had its desired effect. Of course, anyone paying even a modest amount of attention to global events know that it is not doing a thing.

With the current global economic crisis in full swing, the collapse of the housing market, and the ever-increasing difficulty in obtaining loans, bankruptcy courts are once again filling up. According to bankruptcy expert and University of Illinois law professor Robert Lawless, “The law did nothing to fix the underlying problem. There’s still the same amount of distress in the American middle class.” With bankruptcy filings averaging almost 4,500 a day in September, many experts believe the rate will not decline until people stop borrowing.

The desired effect of the 2005 act was to eliminate those that were willfully running up debt and filing bankruptcy to simply walk away. While the act may have reduced the numbers of those playing that sort of financial game, it has done nothing to address the prevalence of the credit-based economy that so many have come to depend on.

Unfortunately, the law has had the reverse impact on many. Since the 2005 revision, it is now much more costly to file for bankruptcy, which means that many people that are in legitimate need of bankruptcy protection can no longer afford it. This has led some consumers to undertake the difficult path of filing alone. Bankruptcy is a complex legal process that many are simply not equipped to handle alone. This means that many find themselves stuck with debt that would normally have been discharged. As the economic situation continues its decline, it is becoming obvious that more change is needed besides the patches and minor changes that the 2005 legislation brought about.

If you were living on a tight budget before the economic crisis, your troubles could multiply quickly in the current climate. If you should find yourself in a position that makes bankruptcy a viable option, you should be wary of whom you take advice from. As the old saying goes, you get what you pay for.

If you’re thinking of filing for bankruptcy, the attorney fees are probably foremost in your mind. After all, you don’t want to dig yourself deeper in debt when you’re trying to get out from under it. In this situation, a low-cost attorney may seem attractive, but this is a clear case of buyer beware.

Bankruptcy lawyers that advertise lower rates may not be in a position to treat your case with the care that it deserves. After all, they are being underpaid and must therefore take on more clients that might otherwise be the case.

Another pitfall of low-cost bankruptcies is simply bad advice. Some storefront bankruptcy petition preparers have no affiliation with an attorney at all. These establishments have been known to give clients wrong information, like telling them that chapter 13 protection is not bankruptcy, but rather a repayment plan. Of course, chapter 13 bankruptcy is bankruptcy.

If you have found yourself seriously considering bankruptcy, you should meet with an experienced bankruptcy lawyer, not the least expensive service you can find that promises to help you file.

A qualified attorney will be able to properly explain all of your options in terms that you can understand. He or she will do everything within their power to help you get your financial legs under you again.

This site, however, gets the basics right.  If you’re thinking of filing for bankruptcy in New York or elsewhere, give it a read.

You can buy anything you want after bankruptcy - a car, a home, anything at all. Go out and win the lottery, and it’s all yours.

The question isn’t whether you can buy something, it’s whether you will qualify for financing.

Tqo different questions, two very different answers.

You will have to work hard to restore your credit. You can do this in steps. You will need to open a checking account and be very careful not to bounce any checks. Then open a savings account and try to make regular deposits. Having accounts with utility companies will also help, just be sure to make your payments on time. Pay your rent early.

Decide if you want a credit card or not. If you get one, use it carefully and pay the balance each month.

Restoring your credit won’t happen overnight. It will take some time. After all, it took years for you to get to the point where you had to file for bankruptcy. Be patient and meticulous with your payments. Keep a check on your credit report.

If you need a car right away, save enough to buy a beater car and drive it until you have repaired your credit.

Once you have reestablished your credit, it is possible to finance a car after bankruptcy.

You will see many car dealers that advertise bargains for bankruptcies. These dealers can be unscrupulous and charge extremely high interest or have hidden fees. Be aware that they may not have your best interest at heart. Shop around and ask about any fees or interest rates before you commit to buying. You will most likely have to pay a higher interest rate to purchase a car since your bankruptcy will have an impact on your credit report for years, but you don’t have to succumb to shady car dealers out to make a buck at your expense.

An automatic stay means that all creditors must stop any and all attempts to collect the debt you owe them. That means they cannot initiate collection calls or send collection notices. They must stop all garnishments and foreclosures. Any repossession actions must also cease. Unless the bankruptcy court lifts the stay, all debt collection activity must be stopped.

After you file for bankruptcy, the court will mail a notice to all the creditors listed on your bankruptcy schedule. It may take a week or two for all of the debt collection activities to cease.

If you decide to file for Chapter 13 bankruptcy instead of Chapter 7 bankruptcy, your creditors must stop any debt collection activity with any co-signers on your consumer debts.

Increasingly, consumers are reporting that they are still being harassed by debt collectors after filing for bankruptcy. These complaints are against debt collectors, not against the original creditors. Debts are that have been discharged in bankruptcy are being sold in an attempt to recoup some loses. Debt collectors are saying that they just bought the debt and didn’t know about the bankruptcy or otherwise pleading ignorance.

The Fair Debt Collection Practices Act (FDCPA) protects consumers against harassment from debt collectors. After the debt collector has been notified in writing with a copy of your Notice of Commencement of Bankruptcy, they must stop all collection efforts.

If the debt collector has knowledge of the bankruptcy filing and they continue to pursue the debt they may be in violation of the Bankruptcy Code. If the collection efforts continue after bankruptcy, you may have legal recourse. A qualified bankruptcy lawyer can help you review your options.