Monday, November 28, 2011

Implementation of Rule 3001 and 3002.1

In a previous post, I mentioned there are changes being made to Rule 3001 and 3002.1, among other changes to the Rules. As with many changes, for the changes to become effective, it is necessary to structure an implementation period.

The National Academy For Consumer Bankruptcy Education is holding a webinar regarding the implementation of these rules on November 30 at 2:00 PM EST. Their invitation to their webinar states as follows:

Join our panel of experts in this joint production of the NACTT and the NACTT Academy to gain common sense, practical answers to questions about implementation of the new rules.  Trustees and practitioners need to prepare for the new rules which take effect on December 1st. This webinar will focus not only on the rules but on the best ways for creditors, trustees and debtors to respond to the requirements imposed.

Title:  Implementation of Changes to Bankruptcy Rules 3001(c) and 3002.1 

Date: Wednesday, November 30, 2011  

Time: 2:00 p.m. EST
Sorry about the format, but remember this is blog, and as such, has limited formatting capabilities.

If interested, you can register by CLICKING HERE.

I hope to follow up this blog post after the webinar as to some of the details regarding the implementation of these rules.

Wednesday, November 23, 2011

Q is For Quick

So, what do I mean by "Quick".  After all, after a bankruptcy consultation, planning for bankruptcy, coming up with the money, filling out the petition, schedules, statement of intentions, statement of financial affairs, and means test, you can finally file.  Oh, don't forget the financial counseling certificate.

Handling all these can be time consuming, and for some, stressful.  So, what does one do when they are in a hurry to get filed in order to prevent things such as wage or bank account garnishment, or eviction order being issued by the court?

Fortunately, the code allows for emergency filings, which I place into the category of quick.  It allows for the filling of a minimal number of documents, with the remaining documents being filed within a specific time frame.  This allows for an automatic stay to be put in place quickly, thereby stopping collection activities and most civil law suites.  The automatic stay will remain in force until lifted by the court or the case is dismissed.

Wednesday, November 16, 2011

Changes to the Federal Rules of Bankruptcy Procedure

There are a number of new Bankruptcy Rules and amendments to Official Forms that will be going into effect on December 1, 2011 and they are listed below.
Federal Rules of Bankruptcy Procedure

  • Bankruptcy Rule 1004.2 (republication of a new rule requiring entity filing a chapter 15 petition to state the country of the debtor's main interest, filer to list each country in which a case involving debtor is pending, and setting deadline for challenging the statement asserting the country of the debtor's main interest) 

  • Bankruptcy Rule 2003 (requires the filing of a statement upon adjourning a meeting of creditors or equity security holders) 

  • Bankruptcy Rule 2019 (expands the scope of the rule’s disclosure requirements by requiring disclosure in chapter 9 and chapter 11 cases by all committees or groups that consist of more than one creditor or equity security holder, as well as entities or that represent more than one creditor or equity security holder. It also authorizes the court to require disclosure by an individual party in interest when knowledge of that party’s economic stake in the debtor would assist the court in evaluating the party’s arguments) 

  • Bankruptcy Rule 3001 (prescribes in greater detail the supporting information required to accompany certain proofs of claim)

  • Bankruptcy Rule 3002.1 (new rule implements § 1322(b)(5) of the Bankruptcy Code, which permits a chapter 13 debtor to cure a default and maintain payments of a home mortgage) 
  • Bankruptcy Rule 4004 (permits a party under limited circumstances to seek an extension of time to object to a debtor’s discharge after the time for objecting has expired)

  • Bankruptcy Rule 6003 (clarifies that the requirement of a 21-day waiting period before a court can enter certain orders at the beginning of a case, including an order approving employment of counsel, does not prevent the court from specifying an effective date for the order that is earlier than the date of its issuance)
  • Bankruptcy Form 1 (implements new Bankruptcy Rule 1004.2)
  • Bankruptcy Forms 9A - 9I (conforming amendments to the pending amendment of Bankruptcy Rule 2003(e)) 

  • Bankruptcy Form 10 (clarifies that, consistent with Rule 3001(c), writings supporting a claim or evidencing perfection of a security interest - not just summaries - must be attached to the proof of claim) 

  • Bankruptcy Form 25A (changes the effective date consistent with 2009 time-computation rules amendments)

Wednesday, November 9, 2011

Duval Clerk Sues MERS

Here is a copy of an article from Mortgage Servicing News

County and state officials are turning up the heat on MERS, as recent lawsuits filed in Florida and Delaware challenge the validity and accuracy of the mortgage industry-controlled loan registry.

The most recent lawsuit was filed by a county clerk in Florida, and seeks class action status to represent the state's 67 counties. The complaint alleges the use of MERS does not comply with state property laws and has cost municipalities millions in unpaid recording fees.
Jim Fuller, the clerk of Duval County, filed suit against Merscorp Inc. and its wholly owned subsidiary, Mortgage Electronic Registration Systems, Inc., on Oct. 31, claiming civil conspiracy, unjust enrichment, as well as fraudulent and negligent misrepresentation. The suit also seeks a hearing to determine the validity of tracking note transfers on the MERS System and a court injunction to prohibit the use of MERS in Florida.
“MERS has usurped the rights and privileges of the Florida Clerks of Court by establishing, maintaining and inducing lenders to use its private recording system, which unlawfully interferes and competes with the public recording system,” the suit, filed in state circuit court, reads.
Merscorp spokesperson Janis Smith said the suit's allegations are inaccurate and false.
“The MERS System is not a legal system of record or a replacement for public land records. No interests are transferred on the system—they are only tracked,” Smith, Merscorp vice president of corporate communications, wrote in a response to emailed questions. “MERS does not have or maintain any document recording system, public or private, and does not do anything to compete with or supplant the public records for land located in the County records.”
Tim Volpe, a Jacksonville, Fla.-based attorney serving as outside counsel for Duval County, claims that when MERS is named on county land records, it creates an illegal disconnect between the mortgage document and the promissory note that allows the owner of the promissory note to change without being recorded in land records—keeping borrowers in the dark about who holds their debt.
“Both the note and mortgage are to be recorded. The principle issue we're trying to get at is the punitive distinction of MERS being the mortgagee while the note is shifted from one to another up through the typical securitization process,” Volpe said in a phone interview. “The principle concern about the disconnect is that the public records are not complete insofar as the true beneficial owner of the mortgage is not reflected in the public records.”
In previous challenges to mortgage liens filed in the name of MERS, the Reston, Va.-based company has relied on agency laws to defend its position as both the legal holder of the mortgage, and as an agent acting on behalf of the owner of the promissory note.
Smith said MERS is the true owner of the mortgage, and is not, in the complaint's words, a “straw man” placeholder listed in public records.
“The 'owner of the loan' is the party who has possession of the promissory note, but the promissory note is not, and has never been, and is not required to be disclosed or filed in the public records,” she wrote.
Following a subpoena issued against MERS earlier this year, on Oct. 27, Delaware Attorney General Joseph “Beau” Biden filed a lawsuit claiming MERS engages in deceptive trade practices. The complaint cites a review of 100 foreclosures in New Castle County during 2010 that showed discrepancies between MERS records and the entities that participated in the foreclosure.
In a press statement, Smith said the claims in the Texas case are without legal or factual merit and that MERS complies with state laws. In a separate statement about the allegations in Delaware, Smith said the MERS business model is “straightforward and transparent,” adding that “[T]he lawsuit they filed was unexpected, and we disagree with the allegations made in their complaint.”

Items Needed For Filing Bankruptcy

I usually hand out a card with a checklist of what items I need from my clients before filing bankruptcy. This is provided as a convenience, however, I still receive calls from time to time asking what is need when they misplace my checklist.  .......So, here is the list:

1) 7 Months Pay Stubs
2) 7 Months Pay Stubs, Spouse
3) 4 Years Tax Returns
4) Deeds, Titles / Registrations
5) Credit Reports
6) Contracts/Leases
7) 4 Months Financial Accounts
8) Divorce Papers
9) Completed Bankruptcy Kit

Here is a quick and short explanation related to the above items.
  1. 7 Months Pay Stubs. Pay advices are need for 2 reasons. First, the local bankruptcy rules (for the Middle District of Florida) actually require pay advices by submitted to the Trustee after filing. This is a deviation from the literal language of the bankruptcy code. This consist of 60 days of pay advices prior to filing.

    The second reason pay advices are needed is for calculating gross income to determine whether or not it is abusive to file a Chapter 7 bankruptcy, according to the bankruptcy code. The attorney must use 6 months of pay advises, like pay stubs (showing gross income), ending the end of the month immediately preceding the filing. So if you filed on July 31, you would need pay advices from January 1 through June 30 for calculating annualized income for this purpose.

    If pay advices (pay stubs) are lost, go to your employer (or previous employer, as the case may be) and ask for a printout of your pay information. You may need to explain, you need the information contained within the pay stubs of your checks.

  2. 7 Months Pay Stubs, Spouse. Same as #1 above, but if the debtor is married, the “second reason” listed in #1 applies to household income. Hence, both spouses income needs to be disclosed.

  3. 4 Years Tax Returns. The bankruptcy code requires the last 4 years of tax returns must have been filed prior to filing bankruptcy. Although the trustees generally only require 2 years be sent to them, I always send all 4 years (because of the language of the bankruptcy code).  Currently that is your tax return for years 2011, 2012, 2013 and 2014.

    If you have misplaced your copy of your return, or filed electronically and simply never had a copy, you can request a transcript, for free, of your returns from the Internal Revenue Service, or you can go by their local office and get a transcript while you wait. To order a return online by going to the Order Your Transcript page, or you can fill out a 4506-T and fax in your request; the faxed form will allow your transcript to be mailed to an address other than the one they have on file for you (such as your attorney).

  4. Deeds, Titles / Registrations. I like to see any and all deeds, titles, and registrations prior to filing to confirm how things are titled, and anticipate any questions the trustee might bring up. Most trustees ask for a copy of these documents within initial correspondence they mail to the debtor(s). After review the documents, I usually hand them back to my client and explain the trustee will be asking for a copy of them; do NOT send the original.

  5. Credit Reports.  My clients provide me with credit reports.  You can also get a copy of your credit report from Annual Credit  Although there are numerous sites indicating they offer free credit reports, this is the only site authorized for providing you the free credit report you are entitled to annually according to the Federal Trade Commission's web site.

  6. Contracts/Leases. These documents most trustees will want to see a copy of, and the exact language is important for the attorney to review to determine what needs to be disclosed, and how it needs to be disclosed, within the bankruptcy paperwork for filing.

  7. 4 Months Financial Accounts. The amount of financial statements requested by trustees varies greatly. I have found the information contained within these reports tends to be the most important, and should be reviewed by your attorney.

  8. Divorce Papers. If divorced within the past 4 years, I require the papers. Sometimes they can be found online, in the public records. This information may be needed for filing out the papers to be filed with the Clerk of the Bankruptcy Court. Most trustees will ask for a copy of these papers.

  9. Completed Bankruptcy Kit. Most of my clients provide me with this information online, so there is no need to actually bring in a kit. However, a few of my clients do not have access to a computer. For those clients, they will be provided a “bankruptcy kit” to complete and return to my office.

Monday, November 7, 2011

Proof Of Claim: What To Look For

So, you just filed a Chapter 13 bankruptcy. You filed you Petition, your Plan, and attended the Meeting of Creditors. At the Meeting of Creditors, no creditors showed up. How about that. You checked the mail, and just received a Statement Of Claim form, that is similar to the one received from the Clerks office earlier, but with this difference; now the form is filled in with information from a creditor.

What should you do with it? Is the information correct? Well, hopefully you are receiving these forms after December 1, 2011, as new rules governing these forms goes into effect on that date. Here is a brief breakdown of what you should be receiving after that date:
      1. If the claim is based on a written document, there should be a copy of that document inclosed with the claim form. If the creditor no longer has the form, because it was lost or destroyed, there should be some sort of explanation included that explains what happened to the document.
      2. If the claim includes interest, fees, expenses and other charges incurred before the petition was filed, the creditor should include an itemized statement.
      3. If the statement includes a security interest, such as a mortgage or vehicle loan, there should be a statement as to the amount necessary to cure any default, as of the date of the petition.
      4. If the claim is on your principal residence, there will be a form attached for this claim. The escrow balance should be disclosed, if any, as of the date of filing the petition.

So, what if the creditor decided they just didn't want to go to the trouble to file all this stuff. Now what? Well, the new language actually puts some enforcement provisions in place. The Court may do 1 of 2 things. First, it may prevent the creditor from presenting the information later; the creditor has the burden to show the failure to include the documents and information “was substantially justified or harmless”. Or the court can award such other relief as it sees fit, including reasonable attorney fees and reasonable expenses.

Saturday, November 5, 2011

The Letter F is for Forms

If you have been following JayFleischman's blog about the alphabet soup of bankruptcy, beginningwith the letter A, for Abandonment, then it is no surprise the letterB is for Bank Account, C is for Creditor, and D is for, you guessedit, Debtor. But, I bet you didn't think E would be for Executory Contract. I thought this was interesting.

Well the next on the list is F. What could this stand for? Well, it could stand for a four letter word; something you say when you receive a call from a debt collector, or one of their hart to hart letters that you through to the side and don't open because you know what is inside. Well, fortunately, we are not going down that road. At least, not in this blog, as I, and my clients, believe in taking the upper road.

F stands for Forms, and not just any forms. These are the official forms for filing bankruptcy, and as chance would have it, the specific form F refers to is called Schedule F. Why they call it a schedule, instead of a form, I really don't know, but if I were to guess, I would say it sounds more official, or politically correct. Yes, it's called a schedule, but it sure looks like a form to me.

So, why is this form important? Well, of the schedules that are filed in a Chapter 7 or Chapter 13 bankruptcy, which consist of Schedule A through Schedule J, this is be far the most widely used. This is where all the non-priority unsecured debts are listed; debts like credit card and medical bills are listed on this form. Generally, when I ask someone who they owe money to, it goes on this form as long as it is not the IRS (depending on the year taxes are due from), or a domestic support obligation (alimony, child support), or a secured creditor (mortgagee, auto loan).

It consist of the name of the creditor, along with anyone else associated with the debt, like a debt collector, their respective addresses, the amount of the debt, and whether or not the debt is disputed. It is very important to list all creditors that should be listed on this form, as if you forget to list someone, you not only could still owe that creditor after your discharge (which is what I thought the letter D should be for), but you may be prohibited from discharging the debt in a subsequent bankruptcy.

I wonder if creditors, after receiving a commencement letter indicating someone has filed bankruptcy, thinks of a four letter word beginning with F while placing the paper in the debtor's file.

Wednesday, November 2, 2011

Bankruptcy: From A to Z

Do you remember back in the early days of school, books were simple, sometimes with pictures, in which you would begin to learn how to read, which would eventually lead to further learning about the ways and wonders of the world. Step by step instruction is nothing new. Sometimes it is in an organized fashion, and sometimes it is in bits and pieces like a puzzle, and does not fully come to gather until all the pieces are known and put in their proper place.

As you can imagine, the bankruptcy code a similar to both. It is an organized bunch of bits and pieces. One of the first steps in understanding the bankruptcy code is to understand its terminology, as the bankruptcy code, similar to many other fields or professions, has its own lingo.

So where is a good place to start learning the lingo of bankruptcy. Well, perhaps a good start might be to learn it like we learned in our early years of school; learning from “A to Z”. Is this unorganized? You bet. But there is a well known bankruptcy attorney, Jay Fleischman, that has a site called Legal Practice Pro, and is going to post on his blog site over the next 26 days, terms as they apply to bankruptcy, starting with A and ending with Z. Well, actually, he starts with an introduction. If you are interested in viewing some of these blogs, you can find his introduction at
and his first letter, A, at
After reading his post, please feel free to let me know what you think by commenting below.

Over time, I will be adding content to this blog, at random, concerning various letters of the alphabet, and applying an explanation of each letter as it may apply to bankruptcy.  Some may think of this a being the bankruptcy alphabet, but I think that is misleading, as it is not meant to be inclusive the terms related to bankruptcy.  As such, I am categorizing it as "Bankrupthabet". 

What does it mean.  Well, bankrupthabet, as of now is undefined.  A common phrase among attorneys is, "I know it when I see it".  This stems from a court case concerning the definition of pornography.  So, how would you define the picture to the left?