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.

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.

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.

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.

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On October 19, 2007, the Bankruptcy Court announced changes to Local Rules applying to Chapter 13 cases and to the form Chapter 13 Plan. These changes take effect on November 1, 2007, and are fairly significant. (The new/changed language is in italics):

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I am often told by potential clients that they want to file a “medical bankruptcy.” Is there such a special type of bankruptcy designed to deal only with medical debts? No. But a recent blog I posted to the Bankruptcy Law Network discusses how someone with crushing medical bills can file for bankruptcy relief while, in most cases, keeping everything they have—their home, their car and their retirement.

Read “Can I File a ‘Medical Bankruptcy’?”

The Honorable Nancy V. Alquist, a Judge on the United States Bankruptcy Court for the District of Maryland, entered a ruling on September 28, 2007 in an important case I argued, In re Baker. This case deals with international bankruptcy at the individual level—it lets people living outside the United States file for bankruptcy in the United States to discharge their U.S. debt. A copy of her opinion may be found by clicking on this link.

The debtor in this case is a U.S. citizen, and moved overseas several years ago. At the time he moved, he owed balances to a number of U.S. credit cards. It used to be that if you incurred a debt in the United States and then moved to foreign country, it didn’t make sense for the creditor to look for you.

Things have changed.

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On November 29, 2007, Brett Weiss will lecture and co-Chair the MICPEL Advanced Consumer Bankruptcy Institute, a full-day session to be held in Columbia, Maryland.

Mr. Weiss will appear on two panels, Chapter 11 for Individuals (with the Honorable Thomas J. Catliota, , Assistant U.S. trustee Mark A. Neal, Stanton J. Levinson, Esquire and James A. Vidmar, Jr.) and Tales from the Listserv and Blogs: FAQ’s and Baffling Issues (with Marc R. Kivitz, Carolyn Gilden Krohn and Daniel M. Press). He will also be giving a lecture on Securitization, and its impact on bankruptcy cases.

This is the second year Mr. Weiss has co-chaired and lectured at this important Institute.

On September 28, 2007, Mr. Weiss will be a speaker at the 22nd Annual Mid-Atlantic Institute on Bankruptcy and Reorganization Practice in Charlottesville, Virginia. The topic for discussion is “What Lies Beneath the Surface: Frightening Issues in Chapters 7 and 13 Cases.” Mr. Weiss will be participating on a panel with the Honorable Stephen C. St. John, Bankruptcy Judge for the Eastern District of Virginia; Rebecca B. Connelly, Chapter 13 Trustee for the Western District of Virginia, Robert V. Roussos, a Norfolk, Virginia bankruptcy attorney, and Professor of Law Emeritus Joseph Ulrich, from Washington and Lee University School of Law.

Tonight, September 12, 2007, marks the beginning of the Jewish new year of 5768. Unless you’re Jewish, this probably doesn’t mean a lot to you. But it is an important year, for 5768 is is a Shemitah (literally, “release,” but commonly known as the Sabbatical) year. Part of the observance of the Sabbatical year includes the forgiveness of debts.

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