According to an article on the US Trustee website, random debtor audits, which were halted in January 2008 due to budgetary problems, will resume on May 12, 2008. The only change appears to be that instead of randomly auditing one out of each 250 cases filed, the UST will audit one out of each 1,000 cases filed.

Brett Weiss was quoted in an article in the May 1, 2008 Salisbury Daily Times. The article, “Bankruptcy Reform May Have Exacerbated Foreclosure Crisis,” discussed the impact of the 2005 adoption of major pro-creditor changes to the Bankruptcy Code, called BAPCPA.

Mr. Weiss’ summary of BAPCPA may be found by clicking on this link.

We’re often asked by new clients what we actually do for them. I thought I’d put a list together:

• We let you answer your phone without your heart seizing with fear that it’s someone calling to collect a bill.
• We give you room in your mailbox for birthday cards instead of bills.
• We let your answering machine be empty when you come home from work.
• We let you know your kids will be going to the same school next fall, because you’ve saved your home from foreclosure.
• We let you know you’ll keep your job because you’ve saved your car from being repossessed.
• We let you sleep at night.

Oh, and we also deal with creditors and the Court, prepare and file pleadings, argue on your behalf, and do all of the other “lawyer work.”

But what our clients remember is the important stuff above. *That* is what we really do.

Brett Weiss was quoted in the January 25, 2008 issue of the Washington Business Journal in connection with the recent bankruptcy filing of one of his Chapter 11 developer clients. Weiss was quoted as saying, “We all know that the current housing market is lousy. And this is making things hard for a lot of good folks.”

The full article may be found on the Washington Business Journal website.

Brett Weiss is honored to announce that he has been named the January 2008 Member of the Month by the National Association of Consumer Bankruptcy Attorneys (NACBA).

As the NACBA site states, “NACBA members give generously of their time, energy, and finances to make the organization successful. They do this without expectation of recognition, but because they believe in our goals. Their contributions benefit not only other bankruptcy attorneys, but the debtors they serve.

“Every month NACBA selects a member whose contributions over the years have been so outstanding that they deserve special recognition. Please join us in applauding these individuals for their support of the goals we all share.”

Mr. Weiss’ profile may be found here.

I’ve taken over a number of cases where a debtor prepared and filed the various bankruptcy documents without the help of an attorney–what is called filing pro se or pro per. Apart from the fact that the schedules generally have to be completely redone (the exemptions are usually wrong, debts are not listed, assets are not listed or are listed or valued incorrectly, the Means Test uses the wrong figures, the Statement of Financial Affairs is incorrect, and the budget is generally wrong), a number of these people lost their homes as a result of not being advised about what was required, how the process worked, how to value assets, how to deal with various types of debts, etc.–something an attorney is required to do.

Others ran into severe problems at the Meeting of Creditors, where they have no one to turn to for preparation or advice, Generally, pro se debtors don’t know what the Trustee is looking for, or how to properly deal with the Trustee’s questions and concerns. One ended up being charged with bankruptcy fraud–all because she didn’t understand the effects of what the information put in their schedules meant.

Finally, under the new bankruptcy law, there are a number of new deadlines that, if missed, can result in the automatic dismissal of your case, and a potentially very complex means test computation. Many bankruptcy attorneys are no longer practicing in this area of law as a result of the changes.

Bankruptcy is a very tricky area of the law (even to attorneys who don’t regularly practice it). Interestingly enough for a federal system, it is very state and locality specific. What will work in California, for example, probably won’t fly here in Maryland.

Do yourself a big favor—see a lawyer.

According to a recent article on the Bankruptcy Law Network by Kansas bankruptcy attorney Jill Michaux, the random and targeted audits of bankruptcy cases by the office of the U.S. Trustee have been suspended. The reason? Congress didn’t appropriate any money!

According to the U.S. Trustee website:

The FY 2008 Consolidated Appropriations Act, Public Law 110-161, provided no funding for debtor audits. As a result, the USTP has suspended its designation of cases subject to audit and has notified the independent accounting firms performing the audits. The Program is pursuing alternative sources of funding to permit it to resume the designation of cases subject to audit and, if successful, intends to reinstate the audits.

While traditionally, Maryland has not been the most homeowner-friendly state in terms of its foreclosure procedures, things have gotten far worse with the deepening of the mortgage crisis. According to State officials, Maryland has jumped from No. 40 to No 15 in foreclosures nationally. A recent article in The Washington Post summarizes the recommendations of the Maryland Homeownership Preservation Task Force. (I haven’t been able to read the full report yet, and my comments below are based on the Post’s summary. If it proves that the summary is wrong or incomplete, I’ll revise this blog.)

It’s always nice to look as if you’re doing something in response to a problem. It’s even nicer to actually do something. Unfortunately, the task force’s recommendations sound a lot more like window dressing than actual improvements in the current foreclosure system in Maryland.

Read the rest

The Absolute Priority Rule (APR) is a long-established principle that in Chapter 11 cases creditors’ claims take priority over shareholders’ claims. Pre-BAPCPA, cases such as In re Gosman, 282 B.R. 45 (Bankr. S.D. Fla. 2002) held that the retention of even exempt property by an individual debtor in a Chapter 11 Plan violates the absolute priority rule unless unsecured creditors are paid in full. Given the many changes made to Chapter 11 by BAPCPA, does the APR still apply? Two recent cases hold that it does not.

Read the rest

Brett Weiss has filed an amicus brief on behalf of NACBA, in a case before the Maryland Bankruptcy Court, In re Bellamy, Case No. 07-11332, The brief argues that debtor’s counsel’s fees must be paid as a priority administrative expense, before claims of secured and unsecured creditors; concurrent payment is not allowed. A copy of the brief is available at http://www.nacba.org/?r=38-63cee9397c2b.