Phoenix Bankruptcy Law Blog

Amendments to the Federal Rule of Bankruptcy Procedure – Part Three

Christopher Ariano — Sun, 26 Feb 2012 01:19:22 +0000

This third part regarding the Amendment for the Federal Rules of Bankruptcy Procedure (FRBP) go into more detail regarding sanctions against the mortgage holder/servicers for failure to comply with the new rules. FRBP Rule 3001 (c) sanctions for mortgage holder/servicers failure to provide the required documentation and information that can include evidentiary, monetary or punitive damages. One example of an evidentiary sanction is if an objection to the creditors claim is filed the creditor’s failure to provide the required information can result in the court refusing to allow the creditor to introduce the omitted information later, unless the creditor can prove its failure to comply was substantially justified or harmless. This may be hard to prove on the creditor’s part. In addition, a “Committee Note” states a creditor’s failure to provide the required documentation will not result, by itself in a disallowance of the claim. The Proof of Claim signed under penalties of perjury that the statements in the claim are true and correct to the best of my knowledge, information and reasonable belief. The penalty for presenting a fraudulent claim is a fine up to $500,000 or imprisonment for up to 5 years or possibly both.

The changes in FRBP 3001 and 3002.1 come from cases the court finds to be unacceptable. The liability for attorneys and proof of claim preparers who sign the forms is huge and because of the very specific information now required some creditors’
attorneys could be reluctant to sign the proof of claim on their clients’ behalf. It is a good idea if you have a mortgage, are contemplating filing bankruptcy, to seek an experienced bankruptcy attorney that will keep you informed, and monitor your bankruptcy Chapter 13 case for non-compliance by your mortgage company and other possible problems that may arise.

Another change to the FRBP is rule 3002.1 (a) and (b), Notice of Payment change filed no later than 21 days before the new payment is effective. In cases where the mortgage loan is escrowed for taxes and insurance and is in an active chapter
13 bankruptcy, the creditor is required to file the Notice of Payment Change within 21 days from the effective date of that payment change. In addition, an escrow analysis must be attached and filed with the supplemental claim to the original proof of claim. This includes not only escrow changes but also on Adjustable Rate Mortgages (ARM) where the interest rate changes. In the case of an ARM loan, a copy of the ARM Change Notice is required. This notice is required to be served on the debtors counsel, debtor and the chapter 13 trustee. The supplemental claim is part of the claims registry for this purpose. This is a lot of information but still more to come. The last article will be reviewing the sanctions for failing to file a Notice of Payment Change, Notice of Post-Petition fees, expenses and charges and wrapping up with this all means to you. It is always a
good idea to be aware of the possible problems that can arise when in a Chapter 13 bankruptcy. Finding an affordable Phoenix bankruptcy attorney is easier than you may think.

Amendments to The Federal Rules of Bankruptcy Procedures – Part 2

Christopher Ariano — Sat, 25 Feb 2012 02:09:42 +0000

In the second part of the Amendments to the FRBP (Federal Rules of Bankruptcy Procedures) we will look into the New Proof of Claim (POC) form and what is now required by mortgage holders and servicers when a loan is in an active Chapter 13. Effective 12/01/2011 the mortgage holder and servicer must include information on the interest rate and must sign a statement (on the form) attesting that the creditor has attached documentation reflecting a perfected security interest. In
addition, the signature block on the Proof of Claim form has changed to include boxes for the creditor; creditors authorized agent, trustee, debtor or a guarantor. This may present a problem for mortgage servicers as to who will sign/execute the completed Proof of Claim if they outsource this process. The employee’s of the mortgage holders / services would be authorized to execute the POC without attaching a Power of Attorney (POA). There are also additional requirements that
include but not limited to an itemization statement of pre-petition interest, fees, expenses (i.e.: property inspections, Broker Price Opinions (BPO)) and charges (i.e.: late charges) that have to be filed with the POC with a statement of the amount necessary to cure any pre-petition arrearages. If the mortgage payments include an escrow for either taxes or insurance or both, an escrow analysis statement needs to be attached to the POC when filing. In order for the POC to be complete these
additional exhibits, have to be included at the time the POC is filed. If the mortgage holder /servicer fail to complete the POC correctly, the bankruptcy trustee can object to it and you could possibly benefit. If you have an experienced bankruptcy attorney, he would be monitoring your case and know when to file an objection based on the mortgage company’s non-compliance to the new rules. Affordable bankruptcy attorneys with expertise in Chapter 13 bankruptcy are also available in the Phoenix Arizona area. You should be aware of these changes in the FRBP as they pertain to your mortgage holder or servicer. To complete the Official Form B10, Attachment A, in part 1 the creditor has to itemize the amount of the principal and interest due as of the date of filing bankruptcy petition and the total interest due as of the petition date which must be
broken down by interest rate and the corresponding time periods. Part 2 requires the description of the fees, expenses and charged that were incurred in connection with the claim with the dates and amounts of each as of the petition date. This is a lot to understand but there is still some ambiguity with the understanding of these rule changes. You should consult with your Arizona bankruptcy lawyer for advice. The next article will explore the rest of the FRBP changes and the sanctions that can be handed down from the courts for non-compliance.

Amendments to the Federal Rules of Bankruptcy Procedure – Part One

Christopher Ariano — Wed, 22 Feb 2012 21:27:50 +0000

The U.S. Supreme Court recently adopted amendments to The Federal Rules of Bankruptcy Procedures and submitted them to Congress for review & final approval last year. Congress approved the amendments which went into effect 12/01/2011. The
amendments change mortgage holders and servicer’s requirements for filing Proof of Claims (POC) and requiring notices relating to claims secured by a mortgage on the debtor’s primary residence. This imposes new obligations on mortgage holders, servicers, and their attorneys when the debtor’s are in a current or new bankruptcy case. Failure to adhere to these new guidelines could result in serious consequences or sanctions imposed by the bankruptcy court. Due to the intricate nature of these new amendments, it is wise to seek an experienced bankruptcy attorney who can review your situation and advise you. These rule changes mainly affect Chapter 13 bankruptcy cases which Chapter 13 bankruptcy attorneys should be aware of. Some of the changes described above in more detail concern the changes to the Proof of Claim forms, the new escrow statement requirement, a new requirement for the filing of payment change notices in which the mortgage company is required to file with 21 days of the effective date of the payment change. This is required on all Chapter 13 cases involving the debtors post petition payments. In addition, there is a required notice of any post petition fees, expenses and charges that
are to be filed within 180 days after the charge occurred. Even when completed by the mortgage holder or servicer, the Chapter 13 trustee and the debtor’s bankruptcy attorney have the right to object up to one year from the filing of the post petition fees, charges or expenses. It is important to hire an Arizona bankruptcy attorney that is experienced and would be able to help. In the next article, we will explore in more detail the new Proof of Claim forms (Official Form B10 and Attachment A; FRBP 3001(c) (1) and 3001 (c) (2)) and the additional information required to be filed with the bankruptcy court, so stay tuned.

HELOC’S & Bankruptcy

Christopher Ariano — Mon, 20 Feb 2012 03:57:29 +0000

An interesting scenario I came across recently may be useful to some who are in this type of situation. If you have a first mortgage and a HELOC, also known as a junior mortgage on your primary residence and are contemplating bankruptcy, first, seek an experienced bankruptcy lawyer to discuss your options. This type of situation can be confusing and difficult to understand and if you try to do it on your own, you are subject to make mistakes that could cost you in the end. Some may think you do not have to pay the second mortgage in a Chapter 7 filing and retain the property. In a Chapter 7, bankruptcy your liability on a HELOC is removed and the HELOC lender is not able to sue you or demand you pay on your loan; however the HELOC is still tied to your property. The lien against the property survives the bankruptcy; therefore, the second still has the right to foreclose. If there is no equity in the property, it is, unlikely the HELOC lender will foreclose but does not prohibit them from doing so in the future if equity is re-established. There are other possible consumer protections from a lenders lawsuit. One, being an anti-deficiency law that some states have so it is a good practice to know what you are dealing with. If for example, the first mortgage forecloses in an anti-deficiency state the HELOC lender would not be able to demand payment on any remaining balance left after the sale of the property. Another exception could be if you reaffirmed with the junior mortgage while inside your bankruptcy it would re-establish your personal liability to repay the junior mortgage. What this means is you obligate yourself while in your Chapter 7 bankruptcy to an enforceable contract that is filed with the bankruptcy court and states your promise to repay all or a portion of a debt that may have been dischargeable in the bankruptcy otherwise. Sometimes you can negotiate with the junior mortgage lender because of the fact there is no equity in the property and they know that as well. This is a very confusing topic and many do not understand or are under the wrong presumption their home is secure. You can locate affordable, discount bankruptcy attorneys in Phoenix, Arizona to get advice on how to proceed if you are thinking about filing a Chapter 7.

Beware the power of the banks in debt collecting

Christopher Ariano — Wed, 07 Dec 2011 04:26:34 +0000

While reading through some of the other bloggers and lawyers about important issues of the day, I came upon wise advice/warnings from the Intellectual Conservative Arizona about the power of the banks.

Sometimes debt comes on pretty unexpectedly, but other times it’s a slow and predictable process you can see coming. Debt is never a comforting thing because it always makes you feel like there is something nagging you, but if you’ve found yourself in a position where you can’t afford to make payments to certain creditors, it’s important to take a careful look at those creditors and your bank account because some banks have the right to take out money without giving any prior warning to pay off debt you owe. This tactic is called the bank’s right to setoff.

When you open a checking or savings account, there’s usually some clause in the mountains of fine print that explicitly says the bank can take out money from your account if you owe it to them. Before you start panicking, it’s key to note that they can usually only do this when you owe money to that specific bank, whether a bank-financed auto loan or credit card debt to the same bank you have a checking account.

So, if you’re having some financial troubles and are thinking about filing for bankruptcy, you will want to close your bank accounts or the money in them could be seized. This isn’t fraudulent advice because for some, the little money in their checking account is used for food and essentials, so having a bank seize the money could be detrimental.

Don’t wait until you’re finding yourself in the position where you are unable to pay off your debts and fear the bank may take your funds. Consult an experienced Tucson bankruptcy lawyer today for your best options.

Extravagant holiday in December, Bankruptcy in January? Don’t Count On It

Christopher Ariano — Sun, 04 Dec 2011 05:27:52 +0000

It’s that time of year again. The time of year that most people call the most wonderful. I hate to be a scrooge, but the holiday season is really the time of year when people feel overwhelmingly obligated to buy everyone they know a present. While some might think buying gifts raises the Christmas spirit, it will actually raise your debt.

Buying gifts is a perfectly acceptable thing to do, but it shouldn’t come at the expense of your financial stability. The economy is still faltering and it’s a time of austerity when people need to tighten their purse strings. There are many approaches people take with holiday spending, but there are two that are particularly egregious. The first is to buy as much as possible on your credit card and then plan for a bankruptcy soon after. Another is to buy things for everyone and then worry about the consequences later.

While both of these are the wrong ways to approach the holiday season, the first is not only wrong, but it’s illegal. This topic has been covered extensively on this blog. You should never rack up debt on your credit cards right before you’re planning on filing for bankruptcy. Not only will the court go back and check for any luxury spending, but this debt will not be discharged.

You should also not ignore your mounting debt. There are many cheaper alternatives to the typical higher priced gifts that you can opt for. Don’t pretend like you have enough money to pay something off if you don’t. It’s that kind of mentality that could contribute to the need to file for bankruptcy. Your friends and family will understand if you simply don’t have the means to buy everyone presents. It’s that type of understanding and closeness that embodies the true spirit of the holidays.

Nevertheless, if you find yourself in any financial trouble, remember to talk to a Phoenix bankruptcy lawyer to see if bankruptcy is your best option. Never wait until it’s too late.

Will creditors keep calling me after a bankruptcy?

Christopher Ariano — Wed, 30 Nov 2011 06:38:02 +0000

One of the worst aspects about being in debt are the constant calls from angry creditors and debt collectors asking you for their money. They are persistent and may even call every day. It’s an anxiety-inducing burden to avoid phone calls because it could be one of them.

If you’ve gotten to this point, sometimes the only thing that simultaneously stops creditors from calling and eases your financial strain is filing for bankruptcy. Coming to talk to an experienced Phoenix bankruptcy attorney is an important first step at getting these annoying guys off your back.

Once you file for bankruptcy, you are given what’s called an automatic stay. This means debt collectors and creditors are prohibited from harassing you for money and taking additional action against you. I know for many people this alone reduces their stress significantly.

The answer to the question about whether creditors can keep calling you after a bankruptcy is a flat out no. Nevertheless, even though they should not call you after a bankruptcy, some simply don’t follow the rules.

There have been a number of cases in which angry creditors keep calling, garnishing your wages and harassing you even after the automatic stay. Sometimes it’s possible they don’t know about your bankruptcy case, so they need be informed about the automatic stay. If they know and are still bothering, it’s actually against the law.

By contacting your bankruptcy attorney, they can be fined and even prosecuted for punitive damages. So, if you’re being intimidated by creditors and are drowning in debt, consider getting some much welcomed relief today.

Don’t let fear of a bad credit score stop you from filing for bankruptcy

Christopher Ariano — Tue, 22 Nov 2011 19:14:40 +0000

One of the biggest concerns people have when filing for bankruptcy is that it will completely ruin their credit and prevent them from being able to get loans or credit cards for years. There are grains of truth to this sentiment, but it’s mostly been exaggerated to the point where it wrongly dissuades people from filing for bankruptcy.

I’m here to tell you that you shouldn’t be afraid to file on the basis of your ruining your credit score. Here are a few reasons why.

For many, bankruptcy may actually help your credit score

I know many people say bankruptcy will destroy your credit. To a certain extent that’s true. However, when people file for bankruptcy, it is usually a final option, a last resort for those who are drowning in debt and can’t pay. For most people, by the time they even consider bankruptcy, they’ve already been unable to pay all their bills for a while, which itself destroys credit. If you’ve gone months or years without paying, your credit score could be so low that wiping out all the debt and replacing it with a bankruptcy is more beneficial in the long run. When it does affect your credit negatively, it won’t be as big of a hit as you might presume.

Your credit will come back slowly but steadily

Although knowing that a bankruptcy will be on your record for a few years might feel like an albatross around your neck, it doesn’t mean you’re going to be doomed until it finally comes off. A year after bankruptcy is when you may start seeing your credit score get much higher than it was before the bankruptcy. As long as you continue to pay off all your bills each month and buy some things on a reasonable credit limit, your score will rise consistently.

You can start getting loans and credit cards in as little as two or three years

While I don’t recommend you already start thinking about getting a loan in a few years, especially if you’re in the middle of filing for bankruptcy, you can rest assured that some people are able to rebuild their credit quick enough to do so. It takes patience and finding the right financial institutions to take a risk on you.

Remember, the longer you wait to file for bankruptcy, the longer you’ll be under constant stress and the longer it will take before getting your life back on track. Consult with a Phoenix bankruptcy lawyer today to see if bankruptcy is the right option for you.

Filing For Bankruptcy on your Own in Phoenix: Easier Said Than Done

Christopher Ariano — Thu, 17 Nov 2011 08:31:21 +0000

I’m not the kind of person to toot my own horn and talk up just how important by job is to helping people navigate the complicate bankruptcy legal system. However, last month, the Administrative Office of the United States Court released news of an alarming trend in bankruptcies. More and more people are opting to represent themselves in court rather than hire a bankruptcy attorney.

If you’re thinking about filing on your own, you might not see this as a big deal since not only do you get to have a good story to tell, but you’ll also save money on attorney fees. Well, it’s not really as simple as that. As I’ve discussed at length in other posts, there are so many things that can go wrong when you file for bankruptcy on your own. It’s not a risk worth taking.

Let’s get back to the numbers from the AO. You might think that the reason for the jump in cases where people are opting to represent themselves is due to the increased number of bankruptcy petitions. That’s a wrong assumption. Here’s what the AO said about that:

Research found that, while non-pro se bankruptcy petitions increased 98 percent over the last five years, pro se bankruptcy petitions grew 187 percent over the same time frame.

Even more notable is that the Western states are seeing the biggest jumps with Arizona courts having the third most pro se filings. In fact, pro se filings represent a little more than 20% of the total filings in Arizona, which is a whopping chunk of the filings.

So, what does this mean? Well, it means a few things. Firstly, it means that more people are reading into and using their constitutional rights. If you’re looking to find out if you can file your own bankruptcy petition, the answer is absolutely yes. It’s a constitutional right found in the Sixth Amendment in the Bill of Rights. However, when most people ask whether they should file themselves, the answer is an astounding no!

Another reason people might want to file themselves is to avoid fees. That’s good in theory, but it could end up costing you even more if you do things the wrong way or forget to add something. Filing on your own will also pile on loads of unnecessary stress and frustration.

You don’t have to commit to anything, but I highly recommend you speak to an experienced Phoenix bankruptcy lawyer regarding your best options before filing a bankruptcy petition alone.

Can bankruptcy come back to haunt me? Does filing for bankruptcy make me less trustworthy?

Christopher Ariano — Sun, 13 Nov 2011 04:20:34 +0000

There’s something in the news I found very interesting this week that gets to the heart of the issue of bankruptcy. Presidential hopeful Herman Cain has been accused of sexual harassment by women from his past and although this is a hot-button issue, there’s something disheartening and plain wrong about the coverage that relates to bankruptcy.

In order to dig up dirt and information on one of the female accusers, the media has coyly pointed out her two bankruptcies in distant past and seems to be using them to discredit her as if past financial troubles are an indication of moral character. This is where I take major issue. There are a couple important issues and questions to tackle with what’s going on in this situation.

Can bankruptcy come back to haunt me?

As discussed earlier on this blog, your bankruptcy is a matter of public records, so you will not necessarily be able to keep it a secret from your family or others. However, PACER (the Public Access to Courts and Electronic Records) is a very unwieldy and anti-user-friendly database. The only way someone is going to find out if you’ve filed for bankruptcy is if they actively seek out the details. Besides, most people have no idea what PACER is or how to use it. While under very rare circumstances (for example, if you’re under intense national scrutiny by the mainstream media and political junkies), people may find out about the past. This comes to your next logical question.

Does filing for bankruptcy make me a less trustworthy person?

Even though people may try to discredit people by pointing out past bankruptcies, a bankruptcy does not make someone less trustworthy. There are millions of cases where people were forced to file for bankruptcy because of unfortunate circumstances like lost jobs or other unexpected problems. A bankruptcy doesn’t necessarily mean someone is financially irresponsible and it should never be used to discredit anyone’s character either way.

Especially in this stagnant economy, millions have filed for bankruptcy due to various reasons, but it doesn’t mean they’re bad people. If you’re thinking about filing for bankruptcy because people might find out and not trust you, this is the worst thing you could do. If you are in a dire financial situation, you could throw your whole future down the drain by not filing for bankruptcy and tarnish your image even more. Bankruptcy indicates an acceptance of a need for help and shows responsible action.

Remember, a bankruptcy will not become a stain on your past and it’s better to file than to let things get too out of hand. So, come to a free consultation with a Phoenix bankruptcy attorney today to discuss your new future.