Bank of America to pay 108 millions fine

If it can be said that Countrywide single handedly triggered this foreclosure fiasco, it would not a fictitious statement. Countrywide was more liberal in awarding loan to undeserving people without checking any of their creditworthiness compared to any other financial institution. We have hundred of thousands of home foreclosure situations throughout USA and no one is found to be blamed and punished. Finally, Bank of America is found culpable and rightly punished. This bank has not learnt anything from Countrywide’s fiasco, and still doing lots of bad things including a very slow loan modification process. Following is an interesting article to read about all these matters


Can You Keep Your Car in Bankruptcy?

Can You Keep Car If You File For Bankruptcy?
[Law office of Malik Ahmad can be contacted to get free consultation for bankruptcy]
I have been asked many times about keeping car after declaring bankruptcy. The simple answer is yes, you can keep your car. But also it this is a white elephant, and you are fed up making the huge monthly payments, you can get rid of too. The federal plan for bankruptcy does not like to wipe out everything you have. You still can keep a job, and of course driving from to work and back to home. A car is an indispensable tool, and one cannot live without it. You have to drive to work. So let’s handle this questions once and for all. Debtor who file bankruptcy can keep one car in Nevada up to $15,000. worth of equity. Again, you have to think if you can afford the payment and like to continue the car. The most important questions is that if you can afford the car payments.
By filing bankruptcy, you erase your personal obligation to pay debt. When a debtor reaffirms debt, she is agreeing to continue being obligated for the debt, as opposed to discharging it as part of the bankruptcy. As a condition of keeping the car, your lender will make you reaffirm the obligation to make your car payments. After you have executed the reaffirmation agreement with the help of your attorney, you will continue to make car payments and use your car exactly as you did before bankruptcy. Reaffirmation agreements must be taken seriously because once you sign, you have taken the obligations to make the payments as agreed. The Court will not approve your reaffirmation of your car loan if to do so would constitute an undue burden. Therefore, the consumer must be able to demonstrate that she can continue to make her car payments before the Bankruptcy Court will approve the reaffirmation.
Is Your Car Worth to Keep It?
One of the common misconceptions about bankruptcy is that you will lose all of your property if you file. This is simply not the case. Many people who file bankruptcy retain all of their property through the process through the use of the exemption laws. However, it is important to meet with a knowledgeable bankruptcy attorney to discuss your state’s exemption laws. Additional equity can be protected by using the state wildcard exemption. If you owe more than your car is worth you need not worry about exemptions since you have no equity in your car. The bankruptcy trustee will only seek to liquidate property that has equity which exceeds the amount of your allowed exemption. Keep in mind also that you would likely have the option of paying the Trustee the amount of the non-exempt equity in order to retain your car. To summarize, if you can afford to continue to make your payments and do not have non-exempt equity in your car, you will be able to keep it through the bankruptcy process. If you have fallen behind on car payments and need time to get caught up, chapter 13 bankruptcies may be an option to get you the car back.

Obama Plan is Falling Short for Homeowners

We had said it many times that the current Obama Plan aka HANP is inadequate to stop the increasing foreclosure and combat the rising foreclosure rate across USA. Basically, the HAMP has no teeth in enforcement, and despite all the tough talk the banks are free to deny the deserving homeowners the right to modify their loans. Banks had too many grounds to deny any deserving homeowners. We had suggested that only a very small legislation is required to fix the homeownership in USA. We had proposed earlier and we like to add again here.

-All homes are entitled to loan modification regardless of the income group and regardless of the interest rate.
-Every home is entitled for loan modification and that includes investors homes as well.
-only 2% interest rate should be charged by banks.
-Banks can increase after the initial 5 years to whatever the market rate justifies.
-No documentation should be required for any loan modification.
-Banks should be asked to do the loan modification with 15 days.
-Banks who comply the above requirements should be entitled to get $2000 from homeowners and $1000 from administration.
-These steps would give more revenue to bank to hire more people, add phone lines and faxes.

Now, NY Times has also added their weight to whatever we had been asking previously. Here, is the article from NY Times.

Does Wife Has to Join Bankruptcy?

A question quite often arises, and that is if both spouse needs to join in the bankruptcy petition. The answer is big NO. There is no such obligation that both spouses should join bankruptcy. Only the needful spouse need to file, and the other can stay away. In fact, it is a good idea if one of the spouse does not join. Reason being she can save her credit and both spouse can be benefitted from it down the road in using their good credit again. However, the remaining spouse income need to be included in Mean Test.

Wife Does Not Need to Join Bankruptcy Even If she is on the Mortgage?

Bankruptcy laws allows only one spouse to file bankruptcy even if both spouses are on the deed and mortgage. This is true even if you are past due on your mortgage payments. If only one of you files a Chapter 13 bankruptcy, you will include the past due mortgage payments in the Chapter 13 plan to be paid by the Chapter 13 Trustee. As long as you continue to make the mortgage payments due after the bankruptcy is filed, no adverse action will be taken.

As you may be well aware, anytime a Chapter 13 bankruptcy is filed, an “automatic stay” is put in place. The automatic stay stops all action against you by creditors. Consistent with the filing of a Chapter 13 bankruptcy, an additional advantage is that it also creates a “co-debtor stay”, which prohibits creditors from going after one’s spouse for collection of the debt. One thing should be remembered that the wife’s income would become part of the means test. Again, in Nevada which is a community state, both husband and wife are responsible for each other’s debts especially, if they were accumulated after the marriage. However, the identifiable separate debts are only payable by the concerned spouse if they were incurred prior to the marriage.

Should filing bankruptcy be an embarassment?

Nevada is again leading the nation in the numbers of filing of bankruptcy. Now, even the formerly middle class is filing for bankruptcy. As a consumer law attorney, I had increasingly seen dentists, doctors, schoolteachers and even lawyers filing for bankruptcy. It does not carry the stigma it once did. However, it is still a devastating experience for many people, especially those who never imagined going bust. For starter, it is an emotional matter as folks thinks that they are losers and could not catch up with their bills, or could not manage the money and balance their budget. For the most part is true. I see from their credit reports that most of the expenditures were avoidable initially but mushroomed due to higher interest and lack of the will to pay and reduce the principal. Along the way, the debtor lost their job, and piled up medical bill. Now, the total fiasco is complete, and filing bankruptcy is the only option.

We are seeing an increasing phenomenon where people who have never failed in their life, not in elementary school or junior high or high school or college, are failing in a fundamental way to manage their money properly and file for bankruptcy. It is like a colossal failure to manage their financial affairs. Of course, it has a lot to do with the current and unending home foreclosure crisis.

Nevada’s foreclosure laws also play a significant role in driving up the rate. The state’s foreclosure process occurs without court or government supervision and takes only weeks. No state has a faster foreclosure process. A bankruptcy filing is the only realistic option for most Nevadans seeking to delay a public auction of their homes.

It is nothing to be ashamed of bankruptcy anymore as this is a financial decision and has nothing to do with morality. However, even “forgiving” your debts has been provided in all the holy scriptures and it does have a religious foundation. Now, middle class clients are finding themselves in huge deficits, debt loads, and the imminent prospects of a Chapter 7 or Chapter 13 filing. I am surprised even police officers are filing for bankruptcy.
My observation in this regard is that a typical Chapter 7 debtor or chapter 13 debtors have the following characteristics:
• a homeowner
• Caucasian
• annual income of $45,000
• credit card debt of $41,000
• mortgage and car payment totaling $2,600 per month
• average credit score of 541
• negative net worth of $90,000

As I had written in my earlier posts, it is not advisable to borrow from your 401 (k) accounts as this incur heavy penalty and the debt payment is not considered a “debt” under the Bankruptcy Code. Filing for bankruptcy is your entitlement to exercise your federal rights and it should not be based on emotions or opinions but purely on financial data and your ability to catch up. If you cannot catch up on a sizable debt loan, there should be no hesitation in filing bankruptcy and seeing an attorney for consultation. One should not see embarrassment as a barrier in seeking your federal rights. Your bankruptcy should be a financial decision and not one based on embarrassment to your self.

What is statement of intention: Reaffirmation, Redemption, Surrender, Other?

What is a statement of intention when it comes to secured property in bankruptcy code?

In every exempted property, the debtor likes to keep after bankruptcy, they have to file a statement of intention. Section 521(a) (2) requires the debtor in chapter 7 cases to file a statement of certain intentions with respect to property securing debts and with respect to personal property leases. The debtor need not state his or her plan on this statement. All that is required is a statement:

(i)whether the debtor intends to retain or surrender the collateral,
(ii) whether it is claimed as exempt, and
(iii) whether the debtor intends to reaffirm the debt.

However, the debtor is not required to choose redemption, surrender, or reaffirmation in every case. The debtor may choose other options besides those listed on the form. In practice, the choice of Other is commonly used in Nevada. It has different ramifications which can be discussed only with a qualified bankruptcy attorney. A debtor may also choose to simply continue paying an automobile loan without either redeeming or reaffirming the debt. With respect to leases of personal property, the debtor must state whether the debtor intends to assume the lease.

Duration of Filing: The statement of intention must be filed within thirty days of the filing of a chapter 7 petition or on or before the date of the meeting of the creditors, whichever is earlier. The statement must be served on trustee and all creditors named in the statement on or before the date it is filed. Thereafter he debtor may amend it as of right at any time up to the time when performance is to take place under Code section 521(2(B). Section 521((2) also requires that the debtor “shall perform his intention,” within thirty days after the first date set for the meeting of creditor or such additional time as the court for cause within that period allow. In most cases this is quite simple, if the debtor states intent to retain exempt property that has long since been accomplished. If the debtor’s intention is to surrender the property, there is no requirement to deliver it or to execute a deed to effectuate the surrender, because the Code provisions was not designed to provide a substitute for normal state proceedings to enforce a creditor’s rights to collateral.

Although the chapter 7 trustee is supposed to “ensure that the debtor shall perform” the stated intention, the Code provides no mechanism for the trustee to use. The statement of intention thus seems designed primarily as a way for secured creditors to obtain notice of what the debtor plan to do, and as a guideline to when redemption and reaffirmation should occur. However, because substantive rights are expressly left unaffected, the debtor change his or her mind about what is planned and apparently would not have to file a new statement of that happened.

Is there any sanctions if debtor does not follow his statement of intention?
There are no sanctions provided for failing to carry through on stated intention’s however that conduct would give a secured creditor an additional argument in seeking relief from the automatic stay, or it may result in the termination of the automatic stay with respect to certain personal property.

The debtor has other options in addition to reaffirmation, redemption, or surrender under the Code.

What is the right of redemption in chapter 7?The Code also provides that for certain secured consumer debts the security interest may be eliminated upon payment to the creditor of the value of its collateral. The purpose of this section is to avoid creditors taking an unfair advantage of the debtor’s situation. The redemption provision provides a simple procedure, within the chapter 7 case, for the debtor ro remove a creditor’s lien by paying the creditor the real value of the property. This is available to only individual debtor and only with respect to certain property and certain debts.