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.


What constitute bankruptcy fraud?

When you file bankruptcy, you take an oath (in 341 meeting as well) that all documents filed are filed diligently and not meant to defraud anyone. Also, within the Bankruptcy court, the officials of Trustee and the Department of Justice investigates all of the paperwork filed and can ask questions in a 341 meeting.
The latest reform of 2005 had made bankruptcy simpler and information, it can, however, be easier to forget to file many documents in Bankruptcy courts and make them subject to a formal investigation.Following is a link with the IRS which gives many examples of bankruptcy fraud.


How to Know If You Were a Victim of Predatory Lending? Do Your Own Audit

Today, we are going to discuss rampant issue of predatory lending and how to diagnose, if you have become a victim of predatory lending. We will give you a list of red flags, and you have to outline all these areas of red flags in a separate sheet while you show your documentation to any Attorney. Remember, and read again my post about the so-called loan forensic audits. I still, truthfully do not agree with what they do. They contact continuously and send me a “sample” forensic audit, and I consider it just a highly computerized data sheet.

I want you to save some money here. Remember, if they find any violations who is gonna sue? (Remember, who love ya baby!) Again, this is not meant to make you specialist. As usual always consult a Nevada licensed attorney. The warning signs of a predatory loan are broken down into three categories:

What Happened Before Signing?
1. What happened leading up to the signing of the loan documents? The Marketing and Sales of Mortgage Loans
2. What happened at the closing?
3. Post closing behavior of your lender.

Now, we are going to discuss all these one by one.
1. Were you a victim of aggressive solicitation of targeted lending practices?
2. Was you steered to high rate lenders?
3. Was there any door to door solicitation of home improvement or financing arranged by contractor or mobile home dealer?
4. Was there any large fee or kickbacks promised to the mortgage broker? Remember the YSP (Yield Spread Premium)
5. Was loan made or promised to mentally incapacitated, older, retired or fixed income group?
6. Was it started as a no-doc loan?
7. Was this loan in excess of 100% loan to value ration (LTV)?

The Application Process
1. Was there any falsification on loan application?
2. Was signature forged?
3. Was co signer properly introduced into the documents?

The Loan
1. Was this a high interest rate (APR)?
2. Was there high fees and closing costs?
3. Was a balloon payment involved?
4. Was there a negative amortization?
5. Was there high appraisal costs?
6. Was there an inflated appraisal?
7. Were fees highly aggressive?
8. Was there any back dating of any documents?
9. Was there a charging of duplicative services?
10. Did it require credit insurance?
11. Was there mandatory arbitration clauses?
12. Was the loan falsely identified as a line of credit or a business loan?

The Closing

1. Was there rushed loan closing?
2. Were the terms at closing different from what the borrowers thought they would get?
3. Was there a failure to give clients at the time of closing?
4. Was the right of cancellation properly disclosed?

After Closing
1. Was there a failure to pay off debts as promised?
2. Was there a flipping of the loan?
3. Was there a flipping of the property?
4. Was there abusive collection practices?
5. Was there any excessive prepayment penalty?
6. Was there any incomplete or inadequate home work done?

What Are Nevada’s Bankruptcy Exemptions

State of Nevada had opted out from the exemption list of federal government. The 2005 Act substantially changed the domiciliary provision found in former section 522(2)(A). The new requirements are found in Section 522(b)(3)(A). These domiciliary requirements also determine which state law will be used to determine whether the debtor may elect to claim the federal bankruptcy exemptions.

Whether State Exemptions Laws Applies?
The state exemption law that applies to a debtor is determined by the state in which the debtor’s domicile has been located for the 730 days immediately preceding petition filing date. If the debtor’s domicile has not been located in a single state for the 730-day period, the applicable state exemption law is that of the state in which the debtor was domiciled for the 180 days immediately preceding the 730-day period, or in which the debtor was domiciled for the longer portion of such 180-day period than in any other place.

Nevada State Exemptions?
Nevada has opted out from the federal bankruptcy exemptions. The purpose of this article is only highlighting the Nevada exemptions.
Exemptions Exemption Amount Statutes
Homestead Real property or mobile home to $550,000 (husband and wife may not double)
Must record homestead declaration before filing for bankruptcy. 21.090(1) (m), 115.010

Public Benefits Aid to blind, disabled, AFDC
Industrial insurance (workers’ compensation)
Unemployment compensation
Vocational rehabilitation benefits 422.291
Personal Property Appliances, household goods, furniture, home and yard equipment to $24,000 total
Books to $10000
Burial plot purchase money held in trust
Funeral service contract money held in trust
Health aids
Keepsakes & pictures
Metal-bearing ores, geological specimens, art curiosities or paleontological remains, must be arranged, classified, catalogued & numbered in reference books
Motor vehicle to $15000; no limit if vehicle equipped to provide mobility for disabled person
One gun 21.090(1) (b)
21.090(1) (a)
21.090(1) (p)
21.090(1) (a)
21.090(1) (f), (o)
21.090(1) (i)
Tools of Trade Arms, uniforms & accouterments you’re required to keep
Cabin or dwelling of miner or prospector; cars, implements & appliances for mining claim you work to $4500 total
Farm trucks, stock, tools, equipment & seed to $4500
Library , equipment, supplies, tools & materials to $4500 21.090(1) (j)
21.090(1) (e)
21.090(1) (c)
21.090(1) (d)
Wages Minimum 75% of earned but unpaid wages; bankruptcy judge may authorize more for low income 21.090(1) (g)
Wild Card None
Insurance Annuity contract proceeds to $350 per month
Fraternal benefit society benefits
Group life or health policy or proceeds
Health proceeds or avails
Life insurance policy or proceeds if annual premiums not over $1000
Life insurance proceeds if you’re not the insured 687B.290
21.090(1) (k)
Miscellaneous Property of business partnership 87.250
Pensions ERISA-qualified benefits to $100,000
Public employees 21.090(1) (q)

What is the role of a Bankruptcy Trustee?

As we know that in every case of chapter 7 or chapter 13, a trustee is appointed by the US trustee. If there is an estate, there shall be a trustee. The trustee’s basic role is to represent the interests of the unsecured creditors. The trustee’s duties in carrying out this role are provided in the statutes. Invariably, they include collecting property of the estate, invaliding certain transfers made from the estate by the debtors, objection to exemptions, objection to discharge, liquidating any nonexempt property and distributing it to creditors with valid claims. Finally, trustee makes a final accounting of all of the estate and its distribution to the United States trustee. The trustee also sends claims for domestic supports obligations.

The trustee duties are limited in a typical chapter 7 case as there may not be many assets. However, trustee evaluates schedules, statements, and exemption claims.

The trustee also participates and presides over meetings of creditors and determines whether to file objections or discharge. Both chapter 13 and chapter 7 trustees are accountable for the performance of their statutory duties and may generally be held liable for failure to perform them. Bankruptcy trustees are not judicial officers and they cannot resolve disputed issues. The trustee cannot be your friend or a foe, as he is impartial and should decide according to the merits of each case.

How to form bankruptcy forms?