Last year the Webster's dictionary added "unfriend" to their current lexicon of American language. Unfortunately, due to shady mortgage practices, "Robo-Sign" may join the likes of "unfriend" as a new reflection of popular culture.
Robo-Signing is a mortgage company practice of allowing barely qualified employees to prepare foreclosure paperwork with out verifying the underlying documents. Often times the employee will sign thousands of affidavits a day supporting the bank's contention that the homeowner has defaulted and as a result the home must be sold at a foreclosure sale. Savy consumer bankruptcy attorneys across the country have cried fowl about these boilerplate affidavits for years and just now the Department of Justice have discovered the sloppy paperwork.
What does that mean for an Alabama homeowner facing foreclosure. The answer is not so simple. Foreclosure sales are covered in Title 35 (Property) Articles 1, 1A, 2, 3 §35-10-1 et. seq. Alabama is a non-judicial foreclosure state. That means that to foreclose on your house in Alabama, all the mortgage company has to do it is hire an attorney to notify you of the the foreclosure sale and run notice of the foreclosure in the local newspaper for 30 days. Mortgage companies are not required to file the foreclosure paperwork with the court which means no judicial figure oversees the proceeding. If an affidavit is not correct, there is little a homeowner can do short of filing for bankruptcy to stop the foreclosure. The interesting thing is that landlords are required to file judicial evictions, however, a homeowner in Alabama is not allowed that same courtesy. Alabama was the last state to join the foreclosure investigation only after news stories reported that 49 other states had joined in the probe. A half-hearted attempt to appear to care about it's citizens.
Wednesday, October 20, 2010
Wednesday, June 23, 2010
Mad Money's Jim Cramer: Bankruptcy Looming for BP? - CNBC
Mad Money's Jim Cramer: Bankruptcy Looming for BP? - CNBC
The collapse of the Transocean rig leading to a bankruptcy filing for BP? That is highly questionable and borders on the ridiculous. Remember, BP doesn't just make billions of dollars from this rig. It is a multimillion dollar corporation that profited - yes, profited - 14 billion dollars in 2009 alone. It seems far more likely, given the 50 million dollars spent on a public relations campaign to improve their image after the spill, that this is just more public relations spinning. And what if it does happen? BP will emerge a leaner, more vibrant company than before. In other words, nothing can hurt the giant of petroleum. BP has the judges in their pocket, the administration in their pocket, and even Dawn, the Unilever brand detergent used to clean the oil sludge from delicate animals in their pocket because, after all, Dawn is made with petroleum.
The most disheartening part of this whole nightmare scenario is that, again, our bankruptcy dockets will include more and more independent fishermen, restaurant owners and other small businesses who now see their future making an independent living choked by the very people who kept them in business. In fact, most are still advocating for more drilling as a way to keep jobs in the community.
I foresee this having a trickle down effect to parts across the country. What happens when the local fishmarket who always has the freshest seafood is no longer able to stock his store? What happens to local eating establishments who are having to pay more and more for seafood from other parts of the country? What happens when the gulf income stream is no longer in the economic market?
But, yet, somewhere there is a highly paid PR guys telling the BP chairman "Bankruptcy could actually make people more sympathetic with us!"
The collapse of the Transocean rig leading to a bankruptcy filing for BP? That is highly questionable and borders on the ridiculous. Remember, BP doesn't just make billions of dollars from this rig. It is a multimillion dollar corporation that profited - yes, profited - 14 billion dollars in 2009 alone. It seems far more likely, given the 50 million dollars spent on a public relations campaign to improve their image after the spill, that this is just more public relations spinning. And what if it does happen? BP will emerge a leaner, more vibrant company than before. In other words, nothing can hurt the giant of petroleum. BP has the judges in their pocket, the administration in their pocket, and even Dawn, the Unilever brand detergent used to clean the oil sludge from delicate animals in their pocket because, after all, Dawn is made with petroleum.
The most disheartening part of this whole nightmare scenario is that, again, our bankruptcy dockets will include more and more independent fishermen, restaurant owners and other small businesses who now see their future making an independent living choked by the very people who kept them in business. In fact, most are still advocating for more drilling as a way to keep jobs in the community.
I foresee this having a trickle down effect to parts across the country. What happens when the local fishmarket who always has the freshest seafood is no longer able to stock his store? What happens to local eating establishments who are having to pay more and more for seafood from other parts of the country? What happens when the gulf income stream is no longer in the economic market?
But, yet, somewhere there is a highly paid PR guys telling the BP chairman "Bankruptcy could actually make people more sympathetic with us!"
Monday, April 5, 2010
Can your credit get better after filing for bankruptcy?
Although filing for bankruptcy protection does have a chilling effect on your credit report, this article seems to propose that your credit score could get better after filing bankruptcy. I consistently impress upon future bankruptcy clients that the ability to get credit is subjective in that if you are able to get credit after filing it would be at the sole discretion of the creditor. Kevin Chern a bankruptcy lawyer and president of Total Attorneys, a legal support firm states that following a bankruptcy, a debtor may have the ability to rebuild their credit within 18 to 24 months. I'm not quite sure I agree with that considering the credit card companies are now making it more difficult to get credit for people with good credit. In the end you will never know if you will be able to get credit until you try. There are no guarantees in the credit world now. See below:
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Tuesday, February 2, 2010
Repaying Loans to Family Members prior to filing Bankruptcy
Frequently I meet with people seeking bankruptcy protection who are surprised that the actions they take prior to filing for bankruptcy can have a lasting impact on their bankruptcy. For instance, let's say the debtor's mother "helped her out" by loaning her money for several months. Later on the debtor comes into some money and repays the family member in full but then subsequently has to file for bankruptcy protection.
Two bankruptcy provisions come into play in this situation. First, Sec. 547 allows the Trustee to avoid any transfer of an interest of the debtor in property made within 90 days before the filing of the petition or up to one year prior to the filing if the transfer was made to an insider. So that means if Debtor wants to ride the Chapter 7 , the price of admission is that she understands the Trustee can and will recover that money from the mother for the benefit of the creditors she is trying to discharge. The law will not allow the debtor to pay off her mom in full when other unsecured creditors would receive nothing in Chapter 7, which brings me to the second provision which comes into play if the debtor files a Chapter 13. According to Sec. 1322, a Chapter 13 repayment plan cannot discriminate unfairly against any class of creditor, i.e., paying the mother in full while the other unsecureds get zip. Furthermore, Sec. 1325 states that a Chapter 13 plan cannot even be confirmed unless the unsecured creditors received at least what they would have received under a Ch. 7, in this case, that would have included the amount of the preferential transfer.
So, that seemingly harmless repayment can become a can of worms in a bankruptcy setting. Invariably the debtor asserts that they didn't know they were going to file at the time of the payment, they don't want their family member involved and that it's "not fair". Those may be valid points, however, they won't get you our of the preferential transfer quagmire.
Two bankruptcy provisions come into play in this situation. First, Sec. 547 allows the Trustee to avoid any transfer of an interest of the debtor in property made within 90 days before the filing of the petition or up to one year prior to the filing if the transfer was made to an insider. So that means if Debtor wants to ride the Chapter 7 , the price of admission is that she understands the Trustee can and will recover that money from the mother for the benefit of the creditors she is trying to discharge. The law will not allow the debtor to pay off her mom in full when other unsecured creditors would receive nothing in Chapter 7, which brings me to the second provision which comes into play if the debtor files a Chapter 13. According to Sec. 1322, a Chapter 13 repayment plan cannot discriminate unfairly against any class of creditor, i.e., paying the mother in full while the other unsecureds get zip. Furthermore, Sec. 1325 states that a Chapter 13 plan cannot even be confirmed unless the unsecured creditors received at least what they would have received under a Ch. 7, in this case, that would have included the amount of the preferential transfer.
So, that seemingly harmless repayment can become a can of worms in a bankruptcy setting. Invariably the debtor asserts that they didn't know they were going to file at the time of the payment, they don't want their family member involved and that it's "not fair". Those may be valid points, however, they won't get you our of the preferential transfer quagmire.
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