P is for Payment: Behind On Car Payments After Filing Chapter 7

Yes, "P" is for Payment.  So, you just filed a Chapter 7 bankruptcy, and at the time of filing, you were current on your payments on your vehicle. You intend to reaffirm (keep) the vehicle. But now, after filing and before your discharge, you have become late on a payment. How will this effect you?

First, when presented with this question, the number one concern usually centers around whether the creditor can repossess the vehicle. The short answer is “That Depends”. When you file bankruptcy, and automatic stay is put in place preventing any collection efforts until one of several things happen.

First, if the case is dismissed, the automatic stay is lifted; that is to say, the creditor can commence, or continue, collection efforts including the repossession of the vehicle. If your case is dismissed, you are no longer in bankruptcy, therefore, you are no longer afforded the protections of bankruptcy. Depending you the circumstances surrounding your dismissal, you may have to wait before you can refile.

Secondly, you are suppose to perform your intention (reaffirm, surrender, or redeem) within 30 days after the date set for your meeting of creditors, also known as the 341 meeting. If you fail to perform your stated intention, then the creditor can go after the asset. However, from a practical standpoint, the creditor may wish to seek permission from the court before going after the vehicle.

If your initial intention regarding the vehicle is to reaffirm it, you may want to consider if this is really in your best interest. If the payments get behind after you have signed and filed the statement of intentions, and you have been granted a discharge, the creditor can repossess the vehicle, and go after you for a deficiency balance the same as if you had not filed bankruptcy. The difference is, it may be a while before bankruptcy can help you again.
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Other notable sites for "P is for ...":

Pay Advice    New York Bankruptcy Lawyer, Jay S. Fleischman  

Phone Call    Cleveland Bankruptcy Attorney, Bill Balena   

Plan    Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell

Preference    Maui Bankruptcy Attorney, BankruptcyHI.com   

Preferences    Colorado Springs Bankruptcy Attorney Bob Doig   

Pride    Southgate, Michigan Bankruptcy Lawyer, Christopher McAvoy   

Property of the Estate    Wisconsin Bankruptcy Lawyer, Bret Nason   

Privacy    Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein   

Also (URLs not available):

Prior Bankruptcy, Will it be a problem?    Philadelphia Suburban Bankruptcy Lawyer, Chris Carr

and

Priority Debt    San Mateo Bankruptcy Lawyer, Jeff Curl   

N is for Negative Notice: Local Rule 2002-4, FLMB

UPDATE - Revised 8/3/2020
The Court REVISES its Permissive Use of Negative Notice List and Accompanying Orders List on a regular basis. The latest revised list may be viewed on the Court's website or by clicking here.
 

                                                                                 Negative Notice

Yes, N is for Negative Notice.  I realize this page is really catering to attorneys where I practice, and as such, may not be very useful to others.  This page deals with procedural matters within in the Middle District of Florida only.  

The following is taken from the FLMB Newsletter, Volume 1, Issue 1, (No, not Willow Pond, as in the pic to the left) from Chief Judge Karen S. Jennemann.  This is a newsletter for the Middle District of Florida, and the following should not be used in other bankruptcy districts.  

 Local Rule 2002-4 provides for negative notice as permissible when filing certain pleadings in order to determine if a matter is contested. You must provide at least 21 days for responses unless the list provides otherwise. Check Local Rule 2002-4 for more details on how negative notice works in our district.

• NOTE: This list has been EXTENSIVELY REVISED.  See the latest posted updates at Negative Notice List.
  
  Should you have a question regarding the Negative Notice List, please feel free to contact me, or another bankruptcy attorney for advise.
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  Other links to the letter "N" are as follows:
  Naked    New York Bankruptcy Lawyer, Jay S. Fleischman    
  Never    Cleveland Bankruptcy Attorney William Balena
  No Asset    Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein
  No Asset Report    Honolulu Bankruptcy Lawyer, Stuart T. Ing 
  Non-PMSI    Philadelphia Suburban Bankruptcy Lawyer, Chris Carr
  Nondischargeable    Northern California Bankruptcy Lawyer, Cathy Moran 
  Nondischargeable    Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein
  Nondischargeable Debt    Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell
  Notice    Colorado Springs Bankruptcy Attorney Bob Doig
  Non-exempt Property    Miami Bankruptcy Attorney, Dorota Trzeciecka  
  Notice    Taylor, Michigan Bankruptcy Attorney, Chris McAvoy
  
  
  
  
  
  

The Principal Paydown Plan Hits a Snag

Please find following, a letter from Billy Brewer, the President of the National Association of Consumer Bankruptcy Attorneys concerning the Principal Paydown Plan.  Despite the efforts of many, the Federal Housing Finance Agency does not favor the plan.  Hopefully with the help of those favoring the plan, it will move forward, but just not as fast as what we had hoped for.

Thanks to the good work of so many members, NACBA’s Principal Paydown Plan to help underwater homeowners in chapter 13 bankruptcy avoid foreclosure, has been endorsed by a substantial number of Members of Congress who in turn have pushed for action by the Federal Housing Finance Agency (FHFA) to implement the plan.  In a series of private meetings and in letters to FHFA, Senators and Members of Congress have asked the FHFA to use its authority over Fannie Mae and Freddie Mac to require them to agree to the Principal Paydown Plan when proposed by a homeowner trying to save a home in chapter 13 bankruptcy.

Despite FHFA Director DeMarco’s initial positive comments about the Principal Paydown Plan, which he said struck him as “being responsible,” and a “credible way to address the crisis while recognizing various interests mortgaged properties,” he recently wrote to Congress informing them that the agency would not be implementing the Principal Paydown Plan.  FHFA concluded that few GSE borrowers have filed for chapter 13 bankruptcy and are underwater and therefore the proposal would not be all that helpful.  They did, however, commit to doing what they can to help eligible borrowers in bankruptcy get the HAMP modifications they qualify for.

While the FHFA response is disappointing and inadequate, and we believe wrong, we are gratified that the many Members of Congress who have pushed for this solution continue to be engaged and are looking for ways to get the Principal Paydown Plan implemented despite the FHFA’s position.  These Members of Congress recognize, as so many of us do, that the foreclosure crisis is not going away anytime soon and so long as it continues, the nation will not enjoy the kind of recovery that is needed to stabilize the economy and get people back to work.

We hope you will join the Board of Directors and Legislative Committee in continuing to get the word out about the Principal Paydown Plan and to seek support for it.  Our allies on and off Capitol Hill are committed to keeping up the push.  We take some comfort in knowing that NACBA was among the first to sound the bell more than five years ago about the impending foreclosure crisis and to propose a widely embraced solution that would have helped minimize the damage that has been done to the economy.  We were right then in proposing legislation to permit modification of mortgages in bankruptcy, an idea that again is gaining currency among policymakers, economists and others.  The Principal Paydown Plan was designed to achieve the same desired result without engaging the same level of opposition to changes to the bankruptcy code.  

We look forward to continuing to work with you to build support for the Principal Paydown Plan.  Please contact either of us if you have questions or comments.

Billy Brewer
President

Manage and Reduce Debt

Many people view bankruptcy as a quick and simple way to get out of overwhelming debt. While bankruptcy is, in fact, a solution for many, it should be viewed as a last case alternative. If there is a way to reduce your debt to a manageable level, or eliminate it altogether (yep, debt free), this is almost always favorable to filing bankruptcy.

Toward this end, how can one get a handle on reducing debt. First, one should be aware of scam artist. There are many organizations that will be happy to take your money with the promise of paying off your credit cards. It usually involves a company paying your credit cards, as they can work something out with the credit card company, as they collect your money. Of course, they collect their fees from your money before paying anything. The question I always have is, does the organization you are sending your money to, do something you can not do yourself?

Recently, I received a link to a CNN Money article about the reduction in the average credit card debt, and included a link to CNN Money. The article list 6 online solutions to debt relief. While they do have some drawbacks, they should be looked at. Best of all, they are free. You don't send them any money. They simply try to give you a game plan. Their web sites are as follows:

ReadyForZero

LearnVest

PayOff

CreditSesame

Bills.com

Mint.com

I DO NOT endorse any of these sites! They are simply here to show you some of the sites referenced by CNN Money.  Please beware the internet can be full of scams, viruses, malware, etc.

Traffic Crash, Bankruptcy, and Who Pays

So, you are in a traffic crash. Of course, as soon as you see one of those 800-ASK-???? adds, everyone that thinks the other person is at fault becomes injured. They call their local attorney, instead of an 800 number, and get signed up.

Well, how about the person that is at fault. It could very easily be someone that is having financial difficulties anyway. In fact, it could be you. So, if you file bankruptcy, will you still have to pay the other driver you injured? This questions should more appropriately be rephrased to ask if you file bankruptcy, will the injured party still be able to collect? While these questions look very similar, there actually is an important distinction I will hopefully make clear by the time you finish reading this blog.

First, we should look at the cause of the wreck. If you were impaired at the time of the crash, you may not be able to discharge this debt. According to the bankruptcy code, you will not discharge a debt “for willful and malicious injury by the debtor to another entity or to the property of another entity” (11 USC 523(a)(6)). So, if you were partaking in some recreational activities causing you to become impaired at the time of the crash, you could very well fall under this exception to the dischargeability of the debt.

Now, lets look at what happens if the debt is actually discharged. After you file the bankruptcy, you can expect the Plaintiff, or injured party, to hire an attorney and file a motion for relief from automatic stay. What the heck does this mean? It, for the most part, is the injured party, through their attorney, asking the bankruptcy court to allow him or her to proceed in state court outside of bankruptcy. If the relief is granted by the court, the order will generally limit the injured party to being able to proceed, but not collect directly from you, the debtor. They are limited to collecting from third parties, such as insurance companies.

So, if you file bankruptcy, an injured party may still be able to collect, but if you receive a discharge, the injured party may be limited to being able to collect from your insurance company.

Y is for Yacht

The letter “Y” is for Yacht. That's right! Can I keep it? Am I off my rocker? After all, we are talking about bankruptcy right? Well, some people, though admittedly not many, have boats, or a yacht, that end up filing a personal bankruptcy.

One of the questions I ask at every consultation is whether or not he or she has any cars, boats, planes, or recreational vehicles. Most, including me at times, think this question is overkill. However, being in Florida, it is not uncommon for debtors to have boats.

The Blog article in the Wall Street Journal reported onSeptember 16, 2010, the following:

A bankruptcy trustee recently won court permission to hire real-estate and yacht brokers to sell the assets of Frederick Darren Berg. Berg’s mansion in Mercer Island, Wash., is listed at $8.2 million, according to the Seattle Business Journal. Located on Lake Washington, the 5,400-square-foot house has four bedrooms, six baths, six fireplaces, a hot tub, wine cellar, wet bar and two kitchens. That’s not to mention its city and mountain views, boat dock and covered parking for four vehicles.

Also up for grabs is Berg’s 70-foot Holland yacht, the Screaming Cora, which Berg says is worth $800,000. Sale proceeds will pay off Berg’s creditors, including Sun Trust Bank (owed $797,450 on a boat loan secured by the yacht) and Commerce Bank of Washington (which holds the $4.38 million home mortgage). [emphasis added]

So, yes, there is at least this bankruptcy proceeding that included a yacht. Normally, boats and planes in the name of the debtor are not exempt from the bankruptcy process. The trustee would take the asset and sell it (assuming there is equity in the asset) in order to distribute the proceeds to creditors.  Of course, in that case, the Trustee is thinking of Y as meaning "yield".

In Florida, however, if someone was living on there boat, or in there RV, they might be able to claim the asset as their homestead property. You see, the Florida Constitution provides for unlimited homestead protection, and though there are not many cases involving yachts being claimed as homestead property, there are a few cases involving boats. Unfortunately, there is not a bright line as to what can be claimed as homestead property, and what can not be claimed as homestead, though the cases provide some very useful insight into how the courts will rule.


So, if you have a yacht, or RV, that you live in, and are curious about whether you will be able to keep the asset after filing bankruptcy, you should consult with a bankruptcy attorney in your area.


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Other articles involving the letter Y are:

Y is for Young vs. the United States (2002)

"Z" is for Zero

Zero.  When you think of zero, what do you think of?  Is zero a verb, noun, or adjective?

Obviously, the word zero can mean many different things.  However, when one is contemplating bankruptcy, the field of meanings may be narrowed a bit.  It could refer to a zero balance in the bank, or perhaps the amount you are eligible to barrow, or the number of creditors continuing to extend credit.

What one may not think of is zero-rate, referring to a value added tax, or zero-sum whereby gains equal losses. If you were to ask a bankruptcy attorney what zero means, you might find he or she refers to a zero percent plan.

So, what is a zero percent plan? The filing of a Chapter 13 bankruptcy includes something called a Plan.  The Plan, once confirmed, or approved by the Bankruptcy Court, controls many aspects of the case as an agreement between creditors, debtors, and the Trustee assigned to your case.  It will include how much money is to be paid to the bankruptcy estate, how often, and for how long; it also includes how those funds are to be distributed.

So, how does zero apply to the Plan?  No, it does not mean No Plan.  It refers to the amount, or percentage of the payments in the plan paid to unsecured creditors, such as credit cards and medical bills.  So, for instance, in the typical Chapter 13 bankruptcy, priority creditors, like the IRS, the Trustee, your attorney, and support payments, would be paid first; then secured creditors, like mortgagees, would be paid.  After they are paid, any additional disposable income is paid to unsecured creditors.  When there is nothing left to pay unsecured creditors (or less than 1%), then you have what is sometimes referred to as a zero percent plan to unsecured creditors.

While some courts allow such treatment of unsecured creditors, others do not.  If you are contemplating filing such a plan, you should check with a bankruptcy attorney in your area to see if this is permitted within the division you are filing in.

Other attorneys speaking about the Letter Z include:
Caldwell Law, LLC