“They” being the creditors, of course.

I have filed a third Chapter 7 for at least three individuals, so, you know, people can get credit again.

But, by the time you contact a lawyer, that good credit rating is in the rear view mirror, or about to be.

People don’t email or call me because they can pay their bills.

They may be current, because they just got the layoff notice, or, in the old days, ran out of new credit cards to get cash advances to make the minimum payments.

So, let’s be clear, it is not bankruptcy that wrecks your credit, it is, not paying your bills.

If you do not file bankruptcy, you still will not have the money to pay your bills, and will still have a bad credit score.

A good credit score comes from paying your bills on time.  Period.

Do not pay the scam companies with the magic formulas, the ones who say they can get that bankruptcy off your credit report earlier than the ten year maximum allowed by current law.

But, people say, how do I get a bill to pay off on time to restore my credit after bankruptcy?

Hey, are there utilities still in your name?

Did you keep paying on a mortgage or car or other vehicle?

Even if you did not reaffirm a debt, you have the right to include, to add, information to your credit report.

Maybe you are renting.

That is another debt you are repaying.

Of course, you pay higher interest for credit after filing bankruptcy.

But, again, you would probably not even get a loan if you had not filed bankruptcy.

Creditors are not standing in line to lend to someone who cannot pay the bills she already has.

But, you are a better credit risk after wiping out a bunch of debt than before, and the creditors know you cannot get another Chapter 7 discharge for 8 years.

You can get a high fee, high interest rate secured credit card.

This is where you deposit X dollars at the bank, and the bank gives you a Visa or MasterCard secured by the X dollars in your account, which you usually cannot use.

I am not recommending this, just pointing out, one way to get credit.

So, this is reality, no shortcuts, it takes a while, but it is done all the time.

How Do I Rebuild My Credit After Bankruptcy?

Related posts:

1. Should I File Bankruptcy?
2. Credit Card Debt Defaults Record High
3. Stop Paying Credit Cards?

Asked by who?  Why, the mortgage company, of course.

Here in Michigan, most homes with mortgages are underwater, worth less than what is owed on them.

So, you file Chapter 7 bankruptcy, your house is worth $100,000, and you owe $#120,000 on it.

This is a time you can walk away from the house, you will be discharged in the Chapter 7 bankruptcy from having to pay anything on the mortgage note.  (Unless the mortgage company sues you in the bankruptcy court, by filing an adversary proceeding and proving you committed fraud in obtaining the mortgage)

But, like most of my clients, you want to keep your house.

Of course, you have to be able to make the mortgage payment after your Chapter 7 bankruptcy.

And keep paying the taxes and keep it insured, just like you did before you filed bankruptcy.

Do you have to reaffirm, to sign a binding reaffirmation agreement, that makes you personally liable on that mortgage note as if you had never filed bankruptcy?

No.

I have yet to see a mortgage company in Michigan foreclose on someone who was keeping the taxes and payments made, and had the home insured, just for not signing a reaffirmation.

It borders on malpractice for an attorney to sign off on a client reaffirming a debt that is more than the value of the home.

I look at upside, downside.

I see no downside to not reaffirming.

Now, some of the mortgage companies say they will not tell the credit reporting agencies that you are making the payments on time.

So?  You have the right to include accurate information in your credit report.

You can add that at least once a year, yourself, without them.

They are required to give you at least annual statements.

The downside?

You sign, something else goes wrong, and you cannot make the payments, they foreclose for the $100,000 the home is worth, and sue you for the $20,000 difference.

Unless they are giving you some fantastic modification, DON’T DO IT!

In Chapter 7 Bankruptcy, Reaffirm My Mortgage?

Related posts:

1. Mortgage Modifications: Problems
2. What Happens In A Michigan Foreclosure?
3. Reasons To File Bankruptcy, Musically Presented

get your bankruptcy discharge, your fresh start, and get on with your life

Couple of years later, you try to sell or re-finance your home, and cannot, because creditors still have liens showing on the record.

How did this happen?

Well, you and your attorney should check the record for liens recorded against your property as part of the bankruptcy process.

Then you can force the creditor to remove the lien during the bankruptcy case.

I am talking about judgment liens, or non-consensual liens, which means, you did not agree to pledge your house as collateral for this creditor.

In Michigan, any unsecured creditor with a judgment against you can record that judgment as a lien on your real estate, your home, by filing papers in the county where you live with the register of deeds.

It is a long, expensive process to foreclose on that lien, to take your home, and the creditor would have to pay any prior liens, like your mortgage.

So that rarely happens.

What does happen is, the creditor sues, gets the judgment, puts the lien on the home, and waits for a sale or re-finance, when the liens have to be paid.

Now, it could be that some company bought the debt after you filed bankruptcy, or the original creditor sues you after bankruptcy.

In Detroit, we have trash can service.

Someone drives by your house and drops the papers in the trash, and says you are served.

So you could have a judgment against you without you knowing it.

Until you try to sell your house.

It could be the creditor does not know about the bankruptcy, if they bought the debt and were not told.

A bankruptcy case can be re-opened to grant relief to the debtor, and enforcement of the discharge is a good reason.

There is no filing fee due in this situation.

I always give creditors another chance to do the right thing before filing a motion to hold them in contempt.

I usually send them the motion I am going to file, so they know exactly what is coming and I can show the Judge they had a chance to resolve the issue out of court.

Prevention is better than cure, so check the title records on your home before you file bankruptcy.

After Bankruptcy, Creditor Lien On My Home?

Related posts:

1. Federal Government Home Appraisal Guidelines
2. What Happens If A Creditor Contacts Me After Bankruptcy?
3. Glossary – Definitions

Debt drives people into bankruptcy.

Student debt drives students into insolvency, that is, being broke, but many are not helped by bankruptcy.

Student loans already saddle many college students with big debts on graduation.

Now, more details are emerging on how colleges profit from getting their students into even more debt, with credit cards.
Credit card companies pay the colleges for names and other information, and rights to market to students.

The Huffington Post reports identifying the the following practices:

“# Sell students’ personal information. Many are contractually obligated to share students’ names, phone numbers and addresses with banks.

# Earn royalties: Banks typically pay schools $1 for each student who keeps a credit card open for 90 days. When students carry a balance, some schools can collect up to $3 more per card.

# Cash in each time a student uses plastic: Many schools are entitled to receive 0.4 percent of all retail purchases made with student cards.

# Benefit from marketing incentives: When a university or alumni association agrees to market cards to students itself, the payoff is greater — sometimes up to $60 for each card opened through a school’s own marketing.

# Offer special perks: Banks sometimes gain special access to athletic events. Cornell University must provide Chase Bank with tickets and “priority” parking passes at football, basketball, hockey and lacrosse games.”

Bad enough to do these things, and without any disclosure, until the recent credit card reform legislation.

But few colleges, if any, are posting this information online so that people can make informed decisions.

But to dump this on your students, few of whom have any real income, most of whom are already in debt with student loans, is unconscionable.

The colleges participate, if not direct, the national myth about the value of a college education.

Hey, if you could get the government to subsidize the cost of your product, that would help your business, right?

Young people frequently lack the perspective to understand how long it will take to pay off student loans, how hard it will be to get a job with enough income to do that, and how having to repay the loans restricts their other options.

Like, being able to buy a house.

Colleges Profit From Student Debt and Student Loans

Related posts:

1. Student Loans: The Big Scam
2. Do I Have To Pay My Student Loans?
3. Student Loan Problems, Bankruptcy Rarely Helps

If your bankruptcy schedules are filled out wrong, can you blame your lawyer for what is on them when you are charged with bankruptcy fraud?

Technically, the criminal charge will be perjury, but it is for filing fraudulent schedules.

That is, not listing an asset you have, answering one of the questions on the statement of affairs incorrectly, or another significant omission.

It would still be incorrect to list something you do not own as an asset, but that rarely happens, and would rarely have any effect on the bankruptcy case.

Hiding assets damages the creditors who might get some recovery from those assets, and, deceives the court as to your real financial condition.

Misrepresentations on your bankruptcy schedules can also lead to denial of your bankruptcy discharge, meaning you would still owe all of your creditors.

Fraud by creditors, well, that is another issue.

Sure, but you will be the one with the jail sentence.

Bankruptcy cases are filed electronically, so the copy on record with the court is not the one that has the “wet”, or ink, signature of the person filing.

In Detroit bankruptcy court, all debtors are sworn in and asked to authenticate their original signature on the papers they did sign.

Peter Pocklington, owner of the Edmonton Oilers when they were winning Stanley Cups, and still hated there for trading Wayne Gretzky to the L.A. Kings.

Though he plead guilty to perjury for filing  fraudulent bankruptcy schedules, he tells the press, hey, I just signed the papers, my lawyer left out those bank accounts and storage facilities that were not on my bankruptcy schedules.

You would think this guy would read something he was swearing to under penalty of perjury before signing it, but, he says he did not.

Guilty of bankruptcy fraud anyway.

Do not sign anything unless you have read it.

Thoroughly and completely.

Everybody blames his lawyer, oldest trick in the book.

Now, I am not saying lawyers are perfect, but if you have one telling you to sign bankruptcy papers that leave out something you told him, better get a second opinion before you sign.

Bankruptcy Fraud: Blame My Lawyer?

Bankruptcy Fraud: Blame My Lawyer?

Related posts:

1. If I Am Filing Bankruptcy, When Do I Stop Paying Creditors?
2. After Bankruptcy, Creditor Lien On My Home?
3. In Chapter 7 Bankruptcy, Reaffirm My Mortgage?

Student loans started with the GI bill in World War II, and has expanded out of control.

Because of:  the colleges.

Tuition costs raced ahead of inflation by over half in the 80s, which looks like a bargain compared to the  four hundred per cent gap in the last ten years.

So, the way to keep attendance up, was, more student loans!

Of course, our friends the bankers were right there, not worried too much about lending standards, as the taxpayer was guaranteeing most of the money lent.

Today’s average college graduate owes over $60,000 in student loans.

The government estimates $605 billion in federal student loans out there, $47 billion already in default.

Private loans estimated at an additional $157 billion of student loans.

Keep tuition increases down to inflation, and that amount would decrease by about 90%.

Over half the amount lent, since 1965, is still out there, unpaid.

Supply and demand, the perceived cost of college is low, because the students are not paying as they go, and have been told how much more money they will make with that college degree.

It more than pays for itself!

No one ever crunches the numbers to check that out.

At some point, that college education is over-priced.

Not if you ask the colleges.

The Zen College Life website suggests, among other things, re-directing the bank bailout money to pay off the outstanding student loan debt.

Well, it would be a better use of the money.

But, once again, people who were frugal and paid their own way, would get screwed.

The government being the one who makes the rules, and the one the student loans are mainly owed to, they are not dischargeable in bankruptcy, unless you sue and prove in the bankruptcy court that it would be an undue hardship for you to have to repay them.

There is a better chance at relief if you were totally scammed, and the college was a sham, or, the program they conned you into was bogus.

For other possible student loan remedies, click on the link.

Student Loans: The Big Scam

Related posts:

1. Colleges Profit From Student Debt and Student Loans
2. Do I Have To Pay My Student Loans?
3. Student Loan Problems, Bankruptcy Rarely Helps

Which leads to more and more bankruptcy filings.

A continuing theme on this blog, that mortgage companies criminal acts caused the foreclosure crisis.

Michigan Senator Levin gained a lot of ink by quoting scatological references in Goldman Sachs memos on the mortgage backed securities that were peddled by Wall Street.

Peddling, OK.

Rating sub-prime junk as AAA, just under U.S. Government debt?

Not OK.

They knew what they were doing; the buyers of the junk, did not.

And now, countries, like Iceland and Greece, that bought the stuff, are effectively in bankruptcy.

Not a payment plan bankruptcy, a Chapter 7, liquidation, we do not have enough money to pay our debts, bankruptcy.

People and companies who got stuck with the securities when the music stopped playing file bankruptcy.

Financial companies were allowed to make up SIVs, Special Investment Vehicles.

Sound complicated?

Just means, we are not showing these liabilites on our books, which, of course, makes us look better.

Same as if you apply for a loan, and don’t have to list your debts.

Makes it look a lot more likely that you will be able to re-pay the loan, and that  you will get the new loan.

Or, in the case of the these companies, that they get to lie to the government about their liabilities, their debts.

Wall Street also lied about the securities that they sold backed by the junk mortgages.

Of course, the mortgage brokers lied to the mortgage companies, and lied to the people borrowing the mortgage money.

To get their commission, paid up front, whether the mortgage was ever paid or not.

Greed is one of the seven deadly sins, it goes way back with us humans.

It cannot be fixed by more laws or regulations.

What they did was illegal when they did it, according to the laws on the books.

They should already have been prosecuted.

Better late than never.

Bankruptcy Filings Caused By Banks

Related posts:

1. Bankruptcy Filings Will Go Up
2. HAMP and Bankruptcy
3. Did Bankruptcy Reform Worsen Foreclosure Crisis?

Home values in Rochester Hills have gone down, one reason given by former Piston Bad Boy Rick Mahorn for his bankruptcy filing.

Well, Warren, Michigan homes have gone down in value, as with homes in every other Michigan community.

And declining home values have pushed many Michigan families into filing bankruptcy.

Though still making a six figure income most years, that was not enough to meet expenses.

Like most of my clients, they struggled for a long time before facing the reality of their situation.

Most of us have a hard time accepting the new economic reality, not just of Michigan, but the world.

His bankruptcy budget showed over $6,100 per month net income, but over $12,500 per month in expenses.

Now, you know this situation built up over time, there was no one calamitous event, like being laid off from a job.

The easiest way to live your life is, to live it in the real world that exists now.

Not in the past, where so many people I talk to are.

That is, they still think their homes will go back up in value to what they were 4 or 5 years ago.

They still think their income is going to go back to what it used to be.

Well, that damn mortgage company is probably not going to wait until those things happen before demanding their monthly payment.

Many people I have spoken to talk about asking mortgage company, or credit card companies, to lower interest rates or reduce payments.

Of course, those are good things.

However, let’s use the Mahorn budget numbers.

Say they had $5,000 per month in credit card payments, and they got that lowered to $2,500.

Great work, right?

But it still leaves them thousands of dollars short, every month, from breaking even.

So, you need to start your analysis of your financial life with, what is your actual monthly income, what do you have to work with.

And, what are your expenses?

Living expenses, not repaying credit cards.

If you have enough for living, and debt repayment, great!

Don’t spend more!

If you have enough for living expenses, but not paying back credit card debt, bankruptcy may work for you.

Watch out for the scam debt settlement companies advertising things like “The Secret the Credit Card Companies Do Not Want You To Know!”

You can contact me for a free phone consultation, and/or order my FREE bankruptcy DVD .

Piston Mahorn Files Bankruptcy

Related posts:

1. Stop Paying Credit Cards?
2. Credit Card Debt Defaults Record High
3. Colleges Profit From Student Debt and Student Loans

There are many reasons it may make sense to file bankruptcy, one Chapter 7 bankruptcy debtor has written a song about some of them.

Warren MI reasons to file bankruptcy are the same as most places.

Job gone or pay cut, too much income for mortgage payments on a home worth too little.

Choices come down to things the kids need, or helping VISA make a little more money.

OK, I am prejudiced.

For kids, against VISA.

The mortgage companies and banks, who screamed for bailouts to rescue them from the inevitable consequences of their own bad decisions, rant and rave to Congress about how unfair it would be to lower the principal on mortgage balances for homeowners.

HAMP has been modified, again, though not starting until the fall of 2010, to pay mortgage companies for voluntarily reducing principal.

That is, modifying mortgages to lower the total balance owed, not just the interest rate, and even that, temporarily.

Judicial mortgage modification is the way to go.

Of course, creditors do not want people to file bankruptcy, they want to get paid.

They argue that principal forgiveness, if forced on them, cost 700 million, a billion, whatever.

They pretend if that principal is not forgiven, it will get paid.

Huh?

People are not going to pay 1 Billion dollars more than their homes are worth.

They will walk away, google “strategic default” if you doubt me.

Or, file Chapter 7 bankruptcy and discharge that mortgage debt.

Not forcing principal forgiveness, by amending bankruptcy law, will not put more money into people’s pockets so that they can afford their mortgage payments.

It would provide that the mortgage company be paid what the home is worth, plus interest.

Personally, I would be happy with a law that required debtors in Chapter 13 bankruptcy to pay 110% or 120% of what their home is worth, it is way better than paying 1.5 times, or double, what the home is worth.

And, better for everyone than just walking away from the mortgage loans.

Reasons To File Bankruptcy, Musically Presented

Related posts:

1. Should I File Bankruptcy?
2. File Bankruptcy, Am I A Failure?
3. After Bankruptcy, Creditor Lien On My Home?

Even though the mortgage and lien were in the name of the husband and wife, a second mortgage lien in the wife’s individual Chapter 13 bankruptcy case has been stripped by a Court.

Judge Rhodes wrote the decision, stripping  second mortgage liens on two consolidated cases.

In each case, worth less than the amount owed on the first mortgage; the home was underwater.

Each home also had a second mortgage on it.

Now, in both of these cases, the spouse not in Chapter 13 had previously filed Chapter 7, and discharged any personal liability on each mortgage.

However, the Court said this had no effect in the outcome.

As with more than half of Michigan houses with a mortgage, the homes had no equity.

So, if the house were sold, it would not evern bring enough to pay the first mortgage.

Even in Chapter 13 cases, bankruptcy courts are powerless to modify the terms of a first mortgage securing the debtor’s home, that is, principal residence,  it has not been uncommon for debtors to get rid of the second mortgage lien in Chapter 13 cases.

The second mortgage lien is stripped only if the debtor make all the Chapter 13 payments and gets a discharge.

Debtors must first file an adversary proceeding, a separate lawsuit in the bankruptcy case, suing the second mortgage company, and proving that the second mortgage lien is unsecured.

11 USC 506 states that a claim is secured only up the the value of the collateral securing the lien.

So, in these cases, one house was worth 120,000, with a first mortgage of 131,117.98, and a second mortgage of 48,262.48.

The other was worth 100,000, with a first mortgage of 103,990.24 and a second mortgage of 45,598.48.

The second mortgage holders claimed that, because the homes were owned as tenants by the entireties, that is, husband and wife, by the filing debtor and the non-filing spouse, that the second mortgage lien could not be stripped in an adversary proceeding brought by only one of the married couple.

The court held that the bankruptcy estate had no interest in that property after carefully analyzing the precedents and facts, finding that there was no equity in the property in which the bankruptcy estate could have an interest.

Many cases have held that the bankruptcy estate includes whatever entireties property is available to pay off joint debts, that is, claims against both husband and wife.

However, Judge Rhodes held that even though the non-filing husband or wife benefits from the lien strip, both spouses do not have to be in the bankruptcy or adversary case.

It is the same as the non-filing spouse benefiting from a run of the mill chapter 13 bankruptcy case, in which one spouse can file and stop a foreclosure.

The deadline to appeal has not run yet.

Related posts:

1. After Bankruptcy, Creditor Lien On My Home?
2. File Bankruptcy, Am I A Failure?
3. Chapter 13 Bankruptcy Not Possible, File Chapter 11?