Recent Articles

Brett Weiss named NACBA Member of the Month »

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.

Do I Need a Lawyer to File for Bankruptcy? »

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.

Bankruptcy Audits Suspended »

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.

Maryland Foreclosure Taskforce Issues Report »

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 »

Does the “Absolute Priority Rule” Still Apply in Individual Chapter 11 Cases? »

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 Files Amicus Brief for National Association of Consumer Bankruptcy Attorneys (NACBA) »

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.

Collection of Debts Discharged in Bankruptcy »

BusinessWeek published online (and will publish in its magazine) an amazing article, “Prisoners of Debt.” This major story talks about the increased selling and collection of debt discharged in Chapter 7 cases. A must read.

BusinessWeek has two companion articles: “Conveniently Not Updating,” about improper credit reporting of discharged debt, and “Whose Second Chance,” about improper collection of discharged debt.

The fact that BusinessWeek (of all magazines) is doing stories about creditor abuse is a clear reflection of just how rampant this sort of thing is.

“Why Do You Need All This Information?” »

My friend, California State Bankruptcy Attorney Cathy Moran, wrote a recent blog titled, “To Tell the Truth,” talking about the information that is now required from clients to file under the new bankruptcy law (BAPCPA).

Cathy correctly notes that, “Calling for gobs of only marginally relevant information was one strategy that creditors included in the bankruptcy “reform” legislation to deter people who needed bankruptcy relief from getting it. They claimed it was to deter fraud; in reality, they counted on the debt ridden to be disorganized, stressed, and discouraged.”

Many people thinking about bankruptcy are indeed stressed and discouraged. Asking them to try and find information that, even if available, is likely to be irrelevant to their case, just adds to their discomfort and confusion. (My favorite is the question asking whether the filer “owns or has possession of any property that poses or is alleged to pose a threat of imminent and identifiable harm to public health or safety.” Asking this question usually results in the response, “Huh?”) But the name of the game here is “Disclosure, Disclosure, Disclosure.” Disclosure, even of irrelevant but required information, serves a number of purposes:

  1. It’s required by the law.
  2. It shows that you have nothing to hide and makes you look truthful.
  3. It makes the Trustees less likely to dig at the Meeting of Creditors.
  4. It helps your lawyer be informed—and things you don’t think are important may be. What your lawyer doesn’t know CAN (and probably WILL) hurt you.

In short, the more detail you provide your lawyer, the better and more smoothly your case is likely to go.

Latest Foreclosure Numbers…It’s Getting Worse »

During the third quarter of 2007, more than 635,000 foreclosure filings were reported nationwide. This works out to one foreclosure for every 196 households. The filings include everything from default notices to auction sale notices to actual bank repossessions.

According to Realtytrac, a foreclosure tracking service, “August and September were the two highest monthly foreclosure filing totals we’ve seen since we began issuing our report in January 2005,”

And the big interest resets from loans closed in 2006 still haven’t started.

How Can I Qualify for a Chapter 13 Bankruptcy? »

Just about everyone, regardless of how much debt they have, can qualify for Chapter 7 bankruptcy (so long as they are eligible under the Means Test). But Chapter 13 bankruptcy is different. In a Chapter 13 case, you have to owe less than a certain amount of debt to qualify.

Read the rest »