SUB-PRIME MORTGAGES REAPPER UNDER NEW NAME

Do you remember this dirty word from not so long ago: "sub-prime?" In hindsight, its usage and manipulation by lending institutions catapulted our economy into the toilet...a move we're still trying to recover from. With investors holding billions of dollars in properties they need to sell, two of the largest financial institutions, Wells Fargo and Citadel Servicing Corp., are back in the sub-prime game. Only this time they're operating under the guise of a “Second Chance Purchase Program.”
According to a recent article in Reuters:
"The bank is looking for opportunities to stem its revenue decline as overall mortgage lending volume plunges. It believes it has worked through enough of its crisis-era mortgage problems, particularly with U.S. home loan agencies, to be comfortable extending credit to some borrowers with higher credit risks."
So far few other big banks seem poised to follow Wells Fargo’s lead, but some smaller companies outside the banking system, such as Citadel Servicing Corp, are already ramping up their subprime lending. To avoid the taint associated with the word “subprime,” lenders are calling their loans “another chance mortgages” or “alternative mortgage programs.” If you're considering purchasing or refinancing a home be sure you understand all the ramifications of the loan programs you're using.

WHAT MAKES UP YOUR CREDIT SCORE?

Prospective clients often ask how their actions will impact their credit score, that three digit number between 300 and 850 that is supposed to reflect your credit worthiness. Much of what makes up the credit score is deliberately kept secret by the privately held corporation (Fair Isaac Corporation) that started developing credit scores in the 1950s. The three credit bureaus (Equifax, Experian, TransUnion) and individual creditors may also have different scores because they use a different credit score model or because not all creditors report to the same bureaus. But we know generally that the FICO score created by Fair Isaac is made up of the following factors; (1) 35% of the score is based on your payment history, e.g. late payments, the length of time since something negative occurred, the number of delinquencies and the number of negative public records regarding debt; (2) 30% of the score is based on the ratio of credit used to the credit available, e.g. how close are you to the maximums on credit cards and the number of open credit accounts; (3) 15% of the score is based on the length of your credit history including how long accounts have been opened; (4) 10% of the score is based on new credit, e.g. how many new accounts have been opened or applied for recently, possibly meaning an overextension of debt; and (5) 10% of the score is based on the mix of accounts, e.g. a variety of different accounts like a mortgage, car loan and revolving credit card accounts. Thankfully there are efforts underway to restrict how credit scores can be used. Evidence suggests that credit score models discriminate against minorities and the poor. Several states have also passed or are considering legislation prohibiting credit scores from being used in employment, insurance and other situations. And some people are rejecting America's credit score obsession altogether by eliminating all or most of their debt. By paying cash for everything they've ruined their credit score but freed themselves from the constant worry about how bills will be paid.

THE SALLIE MAE EMPIRE

With over $1 trillion in debt, federal student loan debt now exceeds credit card debt and over $120 billion of that student loan debt is delinquent. A January 2014 report from the National Consumer Law Center (NCLC) called “ The Sallie Mae Saga: A Government-Created, Student Debt Fueled Profit Machine,” details the extensive role Sallie Mae plays in the student loan industry. Sallie Mae was created in 1972 as a government sponsored enterprise that could use public money to purchase student loans from banks. In 2004 Sallie Mae became a private company but its connection with the U.S. government has allowed it to become very rich. In 2013 it had a net profit of $1.4 billion. But not all of that wealth came legitimately.  A Department of Education Inspector General Audit found that Sallie Mae received over $22 million in student loan subsidies between 2003 and 2006 that it should not have gotten. And Sallie Mae’s involvement in subprime private student loans with high origination and other fees also boosted its riches. According to the NCLC report, when the Obama Administration sought to switch to direct lending programs, Sallie Mae lobbied hard to keep the guaranteed student loan programs that were costing the government and students excessive amounts of money but benefiting private lenders. Although Sallie Mae lost that battle they still remain one of only four companies allowed to service the federal student loan programs.Sallie Mae also owns several of the debt management and student loan collection companies including General Revenue Corporation, Pioneer Credit Recovery and Arrow Financial Services. Photo Credit: AP Sallie Mae’s extensive role in student loan financing is coming under more scrutiny. The Department of Education says Sallie Mae has incorrectly calculated income for the income based repayment program and committed servicing errors. The NCLC report also raises concern that Sallie Mae steers student loan borrowers into forbearance programs rather than other options even though forbearances can be costly to borrowers but easy for collectors. If you have student loan problems contact us to discuss what solutions might help provide relief.

CREDIT REPORT MISTAKES

The Fair Credit Reporting Act (FCRA) prohibits credit bureaus from reporting accounts that have been placed for collection or charged off for more than seven years. The creditor (known as a "furnisher" under the FCRA) is required to tell the credit bureau the date of the first delinquency because the seven years actually begins to run 180 days following that date. After the seven years expires, the debt's "trade line" is supposed to age off the credit report. Creditors, however, sometimes improperly cause the "re-aging" of the negative trade line so that the seven year clock starts again. For example, in one recent case, Temple University failed to report a debtor's loan status to the credit bureaus until after the loan was fully repaid, nineteen years following the date of the first delinquency. Besides "re-aging" accounts, creditors may violate the FCRA if they fail to report that a consumer has disputed the information contained in a trade line. Without the notation of a dispute, the credit report is inaccurate and incomplete. Other credit report mistakes may include (a) reporting the entire balance of a mortgage as unpaid even though the loan may have been partially repaid after a sheriff's sale, (b) reporting a mortgage as delinquent even though the consumer may be current on a new modified loan, and (c) incorrectly reporting a mortgage loan modification under the federal government's Home Affordable Modification Program (HAMP). Consumers can obtain actual (and sometimes punitive) damages, costs and attorney's fees in lawsuits proving violations of the FCRA. If your credit report contains errors, contact us to discuss your options and the procedure for enforcing the FCRA.

PRO ATHLETES IMMUNE TO FINANCIAL TROUBLE? THINK AGAIN

 

Photo Credit: www.mint.com

Now that the Super Bowl is over (let's not discuss the final score), high school and college athletes everywhere are dreaming of making it big in pro sports. Contracts worth millions of dollars are possible even for athletes not selected high in any pro draft. But, just like you and me and all of our clients, money problems aren't foreign to even some of the wealthiest of pro sports players. In fact, there's some evidence to suggest these wealthy players are even more prone to financial problems then the general public. A March 2009 Sports Illustrated story reported that within two years of retirement, 78% of NFL players file bankruptcy or otherwise face severe financial problems. Within five years of retirement, nearly 60% of former NBA players are broke. There are high profile bankruptcy filings like Kenny Anderson, former NBA player who filed bankruptcy in 2005, Michael Vick, former NFL quarterback, who filed Chapter 11 bankruptcy in 2008, and Vince Young, former NFL quarterback who filed Chapter 11 bankruptcy last year (Young reportedly earned over $34 million during his career). But the problems are far more widespread. Between 1999 and 2002 at least 78 players lost more than $42 million dollars because of bad investments according to the NFL Players Association. In general, the same problems that most people who need to file bankruptcy face also strike someone making millions. The Sports Illustrated article cited divorce as one of the primary causes of pro athlete financial problems, along with trusting the wrong people. The real lesson is that the fresh start found in bankruptcy may be necessary regardless of someone's wealth and position.

NATIONAL COLLEGIATE STUDENT LOAN TRUST DISMISSES LAWSUITS

Four lawsuits against two of my clients were dismissed last month after the National Collegiate Student Loan Trust (NCSLT) was unable to prove it was entitled to collect the private student loans my clients allegedly owed. After filing motions to dismiss in each of the lawsuits I argued NCSLT had failed to prove how it was the "real party in interest" when the original loans had been with JPMorgan Chase. The judges gave NCSLT three weeks to file documents showing how it had acquired the right to sue but it wasn't able to do so. NCSLT also failed to show how the debt it was alleging was due had been calculated. If you're facing collection from NCSLT or any other private student loan collector contact us immediately to discuss your defenses.

CHAPTER 13 MORE LIKELY TO SAVE HOMES

A recent study confirms what many of us have known for some time-- filing Chapter 13 bankruptcy is one of, if not the best way to keep people in their homes. Researchers from North Carolina looked at the cases of nearly 4,300 homeowners across the country, all of whom were more than 90 days late on their 30 year fixed rate mortgages. The study said that when homeowners filed bankruptcy, sales of their home were 70% less likely to occur than for borrowers who didn't file bankruptcy. Although this was true whether or not the homeowner filed Chapter 7 or 13 bankruptcy, homeowners who filed Chapter 13 were five times more likely to avoid foreclosure sales.  The researchers found that the unique features of Chapter 13 were good tools for preserving home ownership. These features include the ability to cure defaults at 0% interest, strip liens and pay an attorney over time. Another finding from the study showed that even for borrowers who aren't successful at keeping their house, filing Chapter 13 provides benefits. According to the study, nationally the median length of time from the start of foreclosure to a sale of the house was 8 months for borrowers who didn't file bankruptcy but 16 months for those filing Chapter 7 and 26 months for those filing Chapter 13. This additional time to stay in their home provides borrowers a significant boost. If you're struggling with mortgage issues and want to consider Chapter 13 contact us to talk about what options are available.

CREDIT REPORTING REQUIREMENTS

The Fair Credit Reporting Act (FCRA) requires that when a consumer sends a dispute to a credit bureau it is supposed to forward that dispute to the creditor reporting the inaccurate or incomplete information. The credit bureau must give the creditor all relevant information related to the dispute. The creditor must then review the information and conduct an investigation into whether the report is accurate. If the creditor determines the disputed information is inaccurate it must correct the description of the account (called a "tradeline").

The Consumer Financial Protection Bureau (CFPB), the governmental watchdog over credit reporting, recently issued reminders to creditors about their obligations under the FCRA. The CFPB said it expects creditors to (1) maintain a system capable of receiving information about disputes, (2) conduct investigations using all information forwarded to them by the credit bureaus and their own information, (3) report the results of the investigation back to the credit bureau, (4) provide corrected information to all of the credit bureaus, and (5) modify, delete or permanently block incomplete or inaccurate information that a creditor might have provided to the credit bureaus. The CFPB said it is monitoring complaints from consumers and will bring enforcement actions when necessary. If your credit reports are showing inaccurate information about your debts contact us to talk about what response to take. Pursuing violations of the FCRA requires that specific steps be followed before relief can be sought in court. We can help walk you through what to do and advise whether legal action is warranted.

MODIFYING A CHAPTER 13 PLAN

Clients considering a Chapter 13 bankruptcy are often afraid they'll be stuck in a payment plan they can't afford if something changes during the plan period. As I often tell clients, life doesn't stop just because someone files Chapter 13 bankruptcy so the chances of some unforeseen circumstance disrupting their income are good. Although some clients go the entire 3-5 years without needing a plan modification, more often then not, something will happen that requires a change in the plan payment. Job loss, car repairs, home repairs, medical bills, tax debt. All of these and more might require that a plan be modified to address a borrower's new budget. To modify a plan a motion must be filed with the court explaining why the modification is needed and what the new payment plan is to be. The process for obtaining approval of a modified Chapter 13 plan generally takes at least 45 days so plan modifications can't be done quickly to reflect month-to-month changes in a borrower's budget. But if change in the plan payment is necessary, borrowers can be confident they won't have to continue making a payment they can't afford. If you're in a Chapter 13 plan currently and are anticipating some change that will make you unable to make your plan payment contact us as soon as possible so we can propose the necessary modification.

HEALTH IMPACTS OF TOO MUCH DEBT

Two recent studies document the serious health risks of not dealing with high debt levels. The latest study published in August 2013 from researchers at Northwestern University's School of Medicine looked at the psychological and general health conditions of young adults between the ages of 24 and 32. The study found that adults with high debt (defined as debt exceeding assets) had increases in high blood pressure, higher levels of perceived stress and symptoms of depression. Previous studies had found similar correlations between high debt and psychological health but the researchers were surprised to find that young adults now face physical health problems as a result of higher debt levels.

An earlier study from May 2013 conducted by researchers at the University of Michigan documents the unfortunate consequence of high credit card and medical debt. The researchers found that people are more likely to delay or avoid medical and dental care if they have significant credit card and medical debt. The researchers did not find the same results in households with just mortgages and car loans. The study's author said people with large credit card and medical bills "may be more pressured to repay them to avoid interest and stress, and they may forego medical care to save money under this kind of pressure, even if they really need it."

We have unfortunately seen these problems frequently in our practice. If you're suffering health impacts from too much debt contact us so we can discuss your options.

COSIGNED DEBT IN CHAPTER 13

Co-signing a loan for someone means you're making yourself fully responsible for repayment of the loan. While there may be an agreement between the co-signers as to who is going to make the payments, the lender doesn't need to honor that agreement. They just want to see the loan repaid, regardless of who pays. When a Chapter 13 bankruptcy is filed an "automatic stay" goes into place that prevents lenders from attempting collection. That automatic stay protects a co-signer as well as the debtor if the Chapter 13 plan will result in full payment of the loan. In other words, if someone files Chapter 13 bankruptcy and their plan will result in full repayment of a car loan that's been co-signed by a parent, the lender is prohibited from trying to collect the loan against the parent just as they are prohibited from trying to collect against the child. This is known as the "co-debtor stay" in Chapter 13.



An exception to the co-debtor stay is when the plan fails to propose full repayment of the loan that's been co-signed. In that case, the lender can ask the court to allow them to collect from the co-signer, but only the amount that's not getting repaid through the Chapter 13 plan. A lender may wait until after the bankruptcy is completed to see how much of the co-signed debt still remains before trying to collect from the co-signer. If you have loans or debt that has been co-signed and are considering bankruptcy contact us so we can discuss the impact of the bankruptcy on the co-signer.

MAKING CHAPTER 13 PLAN PAYMENTS

Clients in Chapter 13 bankruptcy can make their Chapter 13 plan payments several ways.  In Iowa the Chapter 13 trustee doesn't accept personal checks and can't do withdrawals from bank accounts but money orders or cashier's checks can be mailed to the trustee each month. The debtors' name and case number should be put on the money order or cashier's check. The best way to make plan payments, however, is through a wage deduction order that the trustee can set up with a debtor's employer. These wage deductions can be structured so that the entire payment is deducted once each month or deductions can occur every pay period and even from each debtor if filing jointly with a spouse. By having a wage deduction order created debtors are more likely to stay current on payments and avoid motions to dismiss from the trustee. The trustee will give debtors a specific plan payment date for each month but it's generally only important to make sure the payment is always made during the month it is due. If  you're interested in learning more about how Chapter 13 works contact us at melissaatthompsonlaw@gmail.com or visit our website at www.thompsonlawoffice.net. 

INDEPENDENT FORECLOSURE REVIEW PAYMENTS

Several clients have begun receiving checks as a result of errors made by mortgage servicers. Unfortunately, the payments don't begin to cover the actual loss suffered by many people who lost their homes to foreclosure or had to put up with multiple mortgage loan modification errors or problems. The checks result from a January 2013 settlement agreement between the nation's top eleven mortgage servicers and federal banking regulators. Nearly four million people are eligible for the payments.

The payments range from $300 to $125,000 depending on the type of servicing error, whether a foreclosure had been completed or not and whether the borrower was an active duty member of the military. Not surprisingly, only about 1100 of the four million  people eligible to receive payments are eligible to receive the largest amount of $125,000. The vast majority of borrowers will receive less than $1000. Payments will be received for a number of different categories, including where a servicer failed to engage with a borrower in a loan modification; where a modification request was denied; where a servicer completed foreclosure on a borrower performing all the requirements of a trial modification; where a servicer initiated foreclosure on someone in bankruptcy; where a mortgage servicer foreclosed on an active duty military member; and where a mortgage servicer failed to convert a borrower from a trial to a permanent modification.  Borrowers who receive and accept these payments waive no rights or defenses they might have against a mortgage servicer. A chart showing the number of borrowers in each category and the payment amount designated for that category can be found on the website of the Office of Comptroller of the Currency.

MORE CHAPTER 11s?

When the 2005 bankruptcy law was adopted by Congress it created a new "means test" that borrowers had to pass if they wanted to qualify for a Chapter 7. Congress limited this requirement only to debtors with primarily consumer debt. In other words, debtors who had incurred most of their debt from a failed business could avoid having to pass the means test in order to file Chapter 7. The provision allowed business debtors to file Chapter 7 even though their budget might have shown substantial income. The 8th Circuit Bankruptcy Appellate Panel (BAP) has ruled though, that a Nebraska bankruptcy court was correct when it approved the forced conversion of a Chapter 7 to Chapter 11 for a debtor who had primarily non-consumer debt but whose budget showed substantial disposable income. The Court said the conversion was acceptable under a different provision of the Code then the provision dealing with exemption from the means test for business debtors. 

The Court's decision raises serious implications for debtors who might need to file bankruptcy because of a failed prior business but who still have high incomes. The decision will hopefully be appealed but unless overturned by a higher court, this decision may lead to more debtors having to use Chapter 11 as a way to eliminate debt from a failed business. 

MORTGAGE MODIFICATIONS

A new report released in January 2013 from the National Consumer Law Center (NCLC) reveals both the successes and failures of mortgage modification programs used by top mortgage lenders and servicers such as Wells Fargo, Chase, U.S. Bank, Citimortgage and others. According to the report, as many as ten million homes are still estimated to be at high risk of foreclosure, with nearly four million foreclosures having been completed between 2007 and 2012. The report looks at the track record of the Home Affordable Modification Program (HAMP), created in 2009 to address the need for mortgage modifications by defaulting homeowners. NCLC found that while HAMP had successfully modified many mortgage loans, massive lender noncompliance had prevented the program from helping all the homeowners it could. In particular, NCLC said lenders violated HAMP by continuing foreclosures without first evaluating homeowners' eligibility for modification; mistakenly or falsely claiming investor restrictions as the reason for denying a modification; and failing to provide required notices. 

As of October 2012 over 14.5 million homeowners were delinquent on their mortgage by more than 60 days. Over 4.3 million homeowners had applied for a HAMP modification but only 1.1 million permanent modifications had been started. Even with the relatively small number of HAMP modifications in place, however, NCLC found that they were still more successful then the non-HAMP modifications mortgage lenders and servicers are more likely to approve. It's not uncommon for a homeowner who applies for a HAMP modification to be told that while they don't qualify for a HAMP modification, the lender or servicer has their own internal modification programs available. In fact, the vast majority of mortgage modifications are not done through the HAMP program but through a lender or servicer's own internal program. NCLC found a big difference between the HAMP modifications and the more common non-HAMP modifications. Over 80% of HAMP modifications are still performing within one year of the modification and they are less likely to default again and lead to foreclosure. But non-HAMP modifications that lenders and servicers push have re-default rates in the first year in excess of 35%. Some of the reasons for these higher default rates for non-HAMP modifications include the fact that there is no requirement that payments be affordable, lenders may require large upfront payments and many homeowners actually lose equity in their homes through non-HAMP modifications. For example, the report cited Chases' internal modification program that extends the term of the loan before doing anything else, leading to tens of thousands of additional dollars in increased interest. The report also found that, in contrast to popular belief, mortgage servicers have significant financial incentives to not approve modifications. Servicers in particular receive a lot of money from foreclosure fees and have little incentive to make modifications for homeowners. 

HAMP is set to expire at the end of this year but since most lenders and servicers push homeowners into non-HAMP modifications anyway, its expiration may not be widely noticed. More importantly, homeowners need to consider all alternatives to the mortgage modifications being offered by their lender or servicer. For example, a Chapter 13 bankruptcy that cures a mortgage default, possibly strips off a second mortgage and preserves existing equity might be far more beneficial. Before agreeing to any mortgage modification contact us at Nancy L. Thompson Law Office, P.C.  

How Does A "Chapter 20" Bankruptcy Work?

Most people are familiar with Chapters 7, 11, 12 and 13 of bankruptcy. Chapter 12 is for family farmers. Chapter 11 is often used by large corporations. Chapters 7 and 13 are used for consumers. But what's a "Chapter 20?" You won't actually find mention of Chapter 20 anywhere in the bankruptcy code but it's the commonly used name for a Chapter 13 following a Chapter 7. But why would anyone file two bankruptcies, one right after the other? Here are two examples of how a Chapter 20 might work.

A debtor who qualifies for a Chapter 7 but has significant nondischargeable debt, like taxes, back child support or student loans, could choose to file either a Chapter 7 or 13. If the debtor files just a Chapter 7 he or she will still leave bankruptcy with a lot of debt. If the debtor files just a Chapter 13 some or all of the nondischargeable debt will be paid through the Chapter 13 plan, but some of the dischargeable debt might be also, perhaps reducing how much money goes to the nondischargeable debt. A better approach might be to file the Chapter 7 first so all the debt that can be discharged will be eliminated. After the discharge, file a Chapter 13 to pay only the debt that couldn't be discharged in the Chapter 7. The Chapter 13 then focuses all the debtor's resources on paying the debt that needs paid. 

Another way Chapter 20 can be used is to file a Chapter 7 to discharge all unsecured debt, followed by a Chapter 13 to strip off a second mortgage or to cram down a motor vehicle or other secured property, neither of which can be done in a Chapter 7. This Chapter 20 then becomes a way to not only discharge all the debt that can be discharged but also to restructure secured debts.  

If you think a Chapter 20 might make sense in your situation contact us at Nancy L. Thompson Law Office, P.C..

FORECLOSURE SCAMS: BEWARE!

Scam-artists are trying to cheat Iowans caught up in the nationwide foreclosure crisis. Mortgage foreclosure "rescue" schemes ask you to pay thousands of dollars up-front for so-called assistance or "rescue" from foreclosure -- but they just take your money and do little or nothing to help. The scam puts you in a deeper financial hole, does nothing to save your home and diverts you from getting real help. The Iowa Attorney General's Office has received scores of complaints from families conned into paying thousands of dollars to companies that promised to help them obtain a loan modification and avoid foreclosure. But then the con-artists did little or nothing to help. The Iowa Attorney General offers these warning signs of foreclosure "rescue" scams:

• Beware of Internet ads promising loan modifications.
• Be wary of solicitations that come by phone, mail, e-mail, or even to your door. Information about people facing foreclosure is included in public court records.
• Watch out for solicitations from out-of-state law firms. Most are foreclosure rescue scams in disguise.
• Beware if someone claims to have a "special relationship" with your lender or "servicer" (they don't). Beware if they tell you not to talk to your lender or servicer directly because that's just what you should be doing.
• Beware if they ask for payment "up-front." It's illegal in Iowa to charge any fee until all services under the contract are provided.     

Don't delay. If you are facing difficulty making payments, or facing the threat of foreclosure, take steps now to save your home but don't fall for "mortgage rescue" loan modification schemes that will only make your situation worse! The earlier you get true assistance the more likely you can save your home. Chapter 13 bankruptcy is often the best method of saving a home and discharging other debt at the same time. It's also possible that a Chapter 13 could be used to eliminate second or third mortgages that are wholly unsecured. The important point is to seek help long before a sheriff's sale is scheduled. In addition, victims of foreclosure scams may have a right to get their money back plus damages. Contact us at Nancy L. Thompson Law Office, P.C. to discuss your situation as soon as you see a foreclosure problem ahead.

SHERIFF SALES

According to the latest reports, over 4000 Iowans who have a Fannie Mae or Freddie Mac mortgage loan are delinquent in their payments. The number of delinquent borrowers is even higher when you include non Fannie or Freddie loans. For some delinquent borrowers a sheriff's sale is the final step to getting out from under a home they can't afford. Many people are deciding to walk away from mortgages that now far exceed the value of their home and their monthly budget. But other borrowers are just as committed to trying to save their home. Unfortunately, the methods being used to avoid foreclosure aren't always as successful as people hope they'll be. Lost paperwork, unkept promises and long delays are common complaints among people seeking mortgage loan modifications. Some clients give up after years of trying.

If you're able to get a modification that results in a significant interest rate and reduction in the principal owed it can be a good start to getting back on your feet. But the majority of loan modifications involve only interest rate reductions and an extension of the term, meaning that the payments in default are added to the back of the loan. Interest in default is capitalized or added to the principal so that a borrower now has an even larger loan balance and is paying interest on interest. Borrowers offered these type of modifications need to seriously consider whether a Chapter 13 bankruptcy, where no interest is paid on the arrearage and the loan balance never increases, wouldn't be a better option. Although interest rate reductions aren't available in a Chapter 13 bankruptcy, it is possible to strip off mortgages that are wholly unsecured. For example, second and third mortgages that are no longer supported by equity in the house can be stripped off and treated like credit cards.

Whatever option a borrower chooses, it's important to not let the process drag on. More than once in the last few months we've been contacted by homeowners who had been told by their mortgage lender they would receive a loan modification only to have their home sold at sheriff's sale. When foreclosure is imminent contact us at www.thompsonlawoffice.net to discuss your options and decide whether a loan modification or Chapter 13 bankruptcy would be the best way to avoid a sheriff's sale.

ELEVEN REASONS TO CHOOSE FILING CHAPTER 13

1. Catch up on back mortgage payments at 0% interest.
2. Catch up on car loan payments and repay vehicles loans at low interest rates.
3.  "Cram down" the loan on a vehicle or other property purchased more than two and 1/2 years ago to its fair market value. 
4. Recover recently repossessed vehicles and repay the loan at low interest rates over time.
5. Strip off your underwater 2nd or 3rd mortgages.
6. Discharge property settlement obligations from a divorce decree. 
7. Repay recent tax debts and back child support over time.
8. Protect non-exempt property at risk in a Chapter 7.
9. Repay private student loans on your own terms.
10. Protect co-debtors on loans being repaid in full through the Chapter 13 from further debt collection.  
11. Retain the ability to pursue prepetition claims against creditors for unfair debt collection or consumer fraud.      

Contact us at www.thompsonlawoffice.net if you want to discuss these aspects of Chapter 13 more.

Judge Sanctions Credit Union

Last fall one of my Chapter 13 clients came to me with complaints that a credit union listed in his bankruptcy as a creditor was sending him letters demanding payment of a debt already being paid through his Chapter 13 plan. The credit union certainly knew of the bankruptcy because it had filed a proof of claim and had received monthly payments from the trustee for over three years. We advised the client to wait until the credit union had sent multiple letters and then we filed a motion against the credit union for violation of the automatic stay.

The automatic stay protects debtors while they're in bankruptcy from the continued collection of debts by their creditors. We received an Order from the U.S. Bankruptcy Court in favor of our client. The court's Order states in part that, "Congress intended the automatic stay to stop "all collection efforts, all harassment, and all foreclosure actions and prevent creditors from attempting in any way to collect a pre-peition debt." The Judge awarded our client $500 for every letter he had received and awarded our attorney's fees so our client had to pay nothing in attorney fees and got money from the credit union also.

The lesson here is that if you're a bankruptcy client in either Chapter 7 or Chapter 13 please notify us immediately at www.thompsonlawoffice.net of attempts to collect a debt listed in your bankruptcy. Keep your documents and phone logs as evidence. The same is true for clients who have already received their bankruptcy discharge. We can obtain the same kind of damages for discharge violations against creditors that continue to try to collect debts after a bankruptcy discharge has been granted.