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 http://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.