Debt Management & Frugal Living by David Giller Esq.

What is "collateral"?

2012-03-22T21:16:00.000-07:00

Collateral is any item of value (asset) which is used in order to secure a loan. The lender has the right to repossess collateral if the borrower fails to pay the loan back.

This is precisely what happens in a foreclosure lawsuit, where the house is the collateral for the mortgage (loan) which is typically used to purchase the house. If the homeowner is unable to make payments on the mortgage, the lender seeks to repossess the collateral (the house) through the foreclosure process, by taking title to the house, while evicting the borrower from the property.

What is an "asset"?

2012-03-22T21:14:00.000-07:00

An asset is anything that you own, including your real estate, vehicles, clothing, jewelry, bank accounts, stocks, electronics, or other personal belongings.

If you own them, but they are in someone else's possession, they are still YOUR assets.

If the title to a vehicle is in YOUR name, but the vehicle is being used by your sibling or child, it is still your asset.

What is "adjusted gross income"?

2012-03-22T21:13:00.000-07:00

Adjusted gross income is the amount of income that you have after taking into account any applicable adjustments generally listed on the first page of the IRS form 1040.

What is a "security interest"?

2012-03-22T21:09:00.000-07:00

A security interest is a lien that is created through an agreement between two (or more) parties. It is an interest in real property (houses, land) personal property, fixtures where those pieces of property are the collateral which secures payments or performance of some other obligation.

What is a bankruptcy "discharge"?

2012-03-20T08:11:00.000-07:00

A bankruptcy discharge is an order entered by a bankruptcy court that voids judgments rendered against a debtor and simultaneously stops the collection of a debt as a personal liability of the debtor.

What is "consumer debt"?

2012-03-20T08:10:00.000-07:00

Consumer debt is debt incurred by an individual primarily for a personal, family or household purpose.

What is a "debt relief agency"?

2012-03-20T08:09:00.000-07:00

A debt relief agency is an entity (or an individual) who provides bankruptcy assistance to an assisted person for payment or a bankruptcy petition preparer.

What is the "means test" in bankruptcy?

2012-03-20T08:08:00.000-07:00

The means test is defined by 11 USCA Section 707(b)(2)(A) which determines whether a bankruptcy case may be filed by a Chapter 7 debtor whose debts are primarily consumer debts is an abuse of the Chapter 7 bankruptcy laws.

Who is the bankruptcy Trustee?

2012-03-20T08:06:00.000-07:00

The Trustee is a person appointed by the attorney general of the United States, whose role is to oversee the administration of bankruptcy cases within a particular territory. In the US, each bankruptcy case has a Trustee assigned to the case, to ensure that the bankruptcy case is properly administered.

What are bankruptcy "exemptions"?

2012-03-20T08:03:00.000-07:00

When we refer to a debtor's exemptions in bankruptcy, we are talking about the property that a debtor may claim as protected, under state of federal law from the claims of unsecured creditors.

You can learn more about bankruptcy exemptions through this link.

What is "Fair Market Value" in Bankruptcy or Foreclosure?

2012-03-07T12:45:00.000-08:00

When trying to help clients either with their potential bankruptcy or foreclosure case, I need to determine the current fair market value of my clients' property.

In a foreclosure case, we are concerned about the current fair market value for the house.

In a bankruptcy case, we are concerned about the current fair market value for the house, all of the contents of the house, and everything else that the debtor might own.

The current fair market value is the amount of money the item is worth - if it were to be sold now, today, "as-is" condition.

Many clients are caught up with how much their house was worth 5-10 years ago, or how much they paid for their furniture, cars and other belongings.

In foreclosure and bankruptcy, those original purchase prices or historical values are completely irrelevant.

Fair Market Value is the amount that you could expect to receive if you HAD TO sell the property within the next 24 hours.

What is a "Deficiency Judgment" in Foreclosure?

2012-03-07T12:43:00.000-08:00

A deficiency judgment is when a foreclosure case has already been completed, the property was sold by the lender for less than the amount owed to the lender, and the lender had obtained a personal judgment against the homeowner for the difference between the sale price of the property and the amount that was owed to the lender.

Q&A: Do I Need to Report ALL of my Income?

2012-03-06T12:06:00.000-08:00

Q: I am interested in filing for bankruptcy in order to eliminate $60,000 of credit card debt. My income is currently $2,000 per month, but I get paid in cash. Do I need to report this income in my bankruptcy petition? If so, will my employer get in trouble?

A: If you are interested in filing for bankruptcy, and seeking the protection of the laws incorporated into the Bankruptcy Code, then you absolutely MUST report all of your income, from all sources - whether it is income from employment, rental income, investment income, or any other type of compensation that you might be receiving. Failure to include all of your income is a serious federal offense and considered bankruptcy fraud.

While I can't possibly speculate about your employer, and whether or not your employer is properly reporting or documenting these payments is, frankly, outside of the scope of my concern as a bankruptcy attorney.

NJ Foreclosure/Mortgage Modification News

2012-02-28T07:25:00.000-08:00

State Supreme Court Decision Could Unlock Foreclosure Floodgates in New Jersey - NJ Star-Ledger

NJ Mortgage Settlement Should Only Be Used To Help Homeowners, Foreclosure Victims - NJ Star-Ledger

Clients Often Ask: "Why Do I Have To Do All The Work?"

2012-02-27T20:49:00.000-08:00

After an initial phone consultation with a potential client, I ask them about their overall debt situation, household income, primary goals, concerns and potential solutions to address their situation.

If it seems like bankruptcy is an appropriate (or inevitable) solution to address the client's problem, I provide them with an extensive list of documents and information to start gathering before I can further analyze their case in order to begin helping them.

Very often, clients ask "Why do I have to do all of the work?"

When I ask them to elaborate and clarify their question, I usually get the following response:

"Well, you are the attorney, and I am coming to you for help. You're giving me all of the paperwork to list all of my bank accounts, my debts, every credit card, collection agency, judgment, every car, piece of property, etc. In addition, you're asking for a tremendous amount of supporting documentation on each of these items. That's a lot of work. Why can't you do all of that? Isn't that what I'm paying you for?"

Sometimes clients even complain to me that every bankruptcy attorney they speak with gives them the same list of information and documents to gather, and they find it quite frustrating.

I typically respond to these clients with the same analogy. I explain as follows:

"Think of me like a doctor. You just came into my office, complaining that your head is hurting. You're asking me to operate, asking me if it's cancer, and how long it will take to recover. However, in order to give you an appropriate diagnosis, I need your blood work, your x-rays, MRI and medical history. If you want to skip all of those details, then I can't help you. I can't possibly know what is wrong with you - without getting the appropriate background information. At this point, all I could do is rely on your description, and make vague assumptions based on what you just said."

Bankruptcy is an incredibly detail-oriented area of the law. It is not as simple as filling out a passport application, as it requires a tremendous amount of documentation, calculations, legal analysis and careful thought.

An attorney can only eliminate those debts that have been identified and listed in the bankruptcy petition.

An attorney can only protect those assets that have been identified and listed in the bankruptcy petition.

If someone is truly looking for a fresh start, they should work with a competent, thorough and detail oriented professional, who can only BEGIN their work once those documents and details are gathered.

Unfortunately, until lawyers develop mind-reading capabilities, clients will have to provide these details.

Articles Worth Sharing

2012-02-27T20:41:00.000-08:00

How to Get A Job Promotion - CNN Money

More Customers Leaving Big Banks - CNN Money

Potential Jobs Don't Always Smack You In The Face - USA Today

Best Money Tips: Free Ways to Prep Your Home for Disaster - WiseBread

How to Preserve Your Relationships When Circumstances Change - WiseBread

Are You An Entrepreneur Or An Employee? - Christian Science Monitor

Failed Housing Programs: How Rental Market Will Benefit? - ABC News

Put Your Passion To Work And Reach Your Financial Goals - MoneyNing

Tips for Impressing A Potential Employer During An Interview - CashMoneyLife

What is "Confirmation" of a Bankruptcy Plan?

2012-02-27T09:02:00.000-08:00

In a Chapter 13 bankruptcy case, confirmation is when the Trustee, the bankruptcy court, and all creditors approve of the repayment plan which was proposed by the debtor (or debtor's attorney).

This is accomplished and formalized through a hearing, which is referred to as the "Confirmation Hearing."

What is "Assignment" on a Mortgage?

2012-02-27T09:00:00.000-08:00

Assigning a mortgage means legally transferring the rights of one party to another.

Bob borrows $500 from Susan. Susan assigns (transfers) her right to collect the $500 to Jane. Jane now legally stands in the shoes of Susan, and can sue Bob if he fails to pay the $500 that was originally owed to Susan.

What is an "Acceleration Clause" in a Foreclosure?

2012-02-27T08:57:00.000-08:00

An acceleration clause is a clause in a contract (like a mortgage), that gives the lender the right to sue the borrower for the entire balance owed on the loan as soon as a certain number of monthly payments are outstanding, or as soon as the property is sold.

For most residential mortgages, it is typical for an acceleration clause to indicate that the entire mortgage amount is owed as soon as the homeowner misses three mortgage payments.

What is "Abandonment" in Foreclosure?

2012-02-27T08:56:00.000-08:00

Unlike the definition applied to "abandonment" in Bankruptcy, when speaking of abandonment in a foreclosure case, one refers to the occupants leaving the property unoccupied, without any intention of returning.

VIDEO: Getting Out of Debt

2012-02-26T08:41:00.000-08:00

Looking to get out of debt?

Watch this video regarding paying down debt, saving money and improving your credit score, from TransUnion.

What is the "Fair Credit Reporting Act"?

2012-02-26T07:34:00.000-08:00

The Fair Credit Reporting Act (FCRA) is an American federal law (codified at 15 U.S.C. § 1681 et seq.) that regulates the collection, dissemination, and use of consumer credit information. It, along with the Fair Debt Collection Practices Act (FDCPA), forms the base of consumer credit rights in the United States.

Fighting Foreclosures: "Produce the Note"

2012-02-26T07:32:00.000-08:00

One of the most common strategies to fight a foreclosure case is by asking the lender to produce the note.

This clip from CNN highlights the issues involved when homeowners pursue this strategy, and the ultimate goals that are often achieved through it:

What is the "Truth in Lending Act" (TILA)?

2012-02-26T07:25:00.000-08:00

Wikipedia actually does a good job explaining the Truth in Lending Act. For your convenience, the definition is provided below:

The Truth in Lending Act (TILA) of 1968 is United States federal law designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed.

TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling, regulates certain credit card practices, and provides a means for fair and timely resolution of credit billing disputes. With the exception of certain high-cost mortgage loans, TILA does not regulate the charges that may be imposed for consumer credit. Rather, it requires uniform or standardized disclosure of costs and charges so that consumers can shop. It also imposes limitations on home equity plans that are subject to the requirements of Sec. 226.5b and certain higher-cost mortgages that are subject to the requirements of Sec. 226.32. The regulation prohibits certain acts or practices in connection with credit secured by a consumer's principal dwelling.

What is the "Equal Credit Opportunity Act" (ECOA)?

2012-02-26T07:24:00.000-08:00

Credit is used by millions of consumers to finance an education or a house, remodel a home, or get a small business loan.

The Equal Credit Opportunity Act (ECOA) ensures that all consumers are given an equal chance to obtain credit. This doesn’t mean all consumers who apply for credit get it: Factors such as income, expenses, debt, and credit history are considerations for creditworthiness. Also requires lenders to consider ANY information provided by the consumer that reflects his or her creditworthiness.

The law protects you when you deal with any creditor who regularly extends credit, including banks, small loan and finance companies, retail and department stores, credit card companies, and credit unions. Anyone involved in granting credit, such as real estate brokers who arrange financing, is covered by the law. Businesses applying for credit also are protected by the law.

The Equal Credit Opportunity Act, and the Federal Reserve Board’s implementing Regulation B, prohibit discrimination in any aspect of a credit transaction on the basis of:
· Race
· Color
· Religion
· National origin
· Sex
· Marital status
· Age (provided that the applicant has the capacity to enter into a binding contract)
· Receipt of income from a public assistance program
· The good faith exercise of any right under the Consumer Credit Protection Act