December 1, 2007 - New Federal Bankruptcy Forms Take Effect

     Effective December 1, 2007, new bankruptcy forms are required in all bankruptcy cases.  Cases filed using old forms may be dismissed by the courts if the error is not correctly in a timely fashion.

November 18, 2007 - Sub-Prime Mortgage Crisis Sure to Increase Bankruptcy Filings

     The epidemic of bad sup-prime mortgage loans will surely cause an increase in bankruptcy filings in the near future.  Bankruptcy still remains a good option for those suffering from the consequences of bad sub-prime loans and in many cases can be the path back to a solid financial future.

October 15, 2007 - Means Test Values Updated

     For all bankruptcy cases filed on or after October 15, 2007, debtors will be required to use updated Census Bureau figures.  These figures determine the appropriate median household income to be used in the Median Income Test and the Means Test.

August 30, 2007 - Mortgage Meltdown Will Likely Lead To More Bankruptcy Filings

     The news has been riddled lately with stories about how the sub-prime mortgage industry is collapsing and how potentially millions of homeowners may soon find themselves in foreclosure.  This is not news to most bankruptcy attorneys who have been warning people for years to stay away from adjustable-rate interest-only mortgages that have been targeted at financially unsophisticated lower-income home purchasers in recent years.  This increase in foreclosure rates will in all likelihood lead to an increase in bankruptcy filing rates nationwide as people struggle to keep their homes in the face of these unfair and predatory lending practices by the sub-prime mortgage industry.  Some are proposing that the federal government step in to ease this crisis.  This, however, appears unlikely to occur.  Even if the federal government does nothing, the safety net of the bankruptcy courts is still available to help struggling families attempt to get back on their feet financially.    

August 2, 2007 - Terms Used to Describe Motions Relating to the Bankruptcy Automatic Stay Can Be Confusing For Some Debtors

     The filing of a bankruptcy typically triggers a type of restraining order called an automatic stay.  This stay prevents creditors from trying to collect a debt or take other actions such as a foreclosure without first seeking formal approval to do so from the bankruptcy court.  When a creditor does seek permission from the court to proceed forward they must file a motion.  These motions are filed under various different names such as a Motion to Lift Stay, Motion to Lift Automatic Stay, Motion to Modify Stay, Motion to Modify Automatic Stay, and many other variations.  These variations can be confusing to those unaccustomed to reviewing bankruptcy filings.  However, they all mean basically the same thing:  that the creditor wants permission to continue their collection, foreclosure, or other remedies.

July 18, 2007 - Many Potential Debtors Mislead By The Bankruptcy Experiences Of Friends and Family

     Potential bankruptcy debtors are often mislead about what their experience in bankruptcy will be like because they mistakenly assume that it will be similar to those of friends and family members who have already been through the bankruptcy process.  The experiences of others in bankruptcy are often a poor indicator because every bankruptcy case is so different.  Even minor differences in the case can have major effects.  For example, in some states it is not uncommon to lose homes, cars, and personal belongs in a bankruptcy.  However, in a state like Texas almost no one loses property in bankruptcy because of the generous exemptions provided in Texas that are unavailable in other states.  Even within the same state, factors such as the type of debts you owe and which chapter of bankruptcy you file under can radically change your case.  The best solution to this problem is to seek out the advice of a competent bankruptcy attorney who can provide you with an individualized assessment of your case.

July 7, 2007 - Paying Back Family Members Prior To Bankruptcy Can Cause More Harm Than Good

     Many people would like to pay back family members for personal loans prior to filing a bankruptcy.  This, however, can have the opposite effect that the debtor desires.  Paying a loan back to a family member prior to a bankruptcy could be considered a preferential payment.  The idea is that your family member shouldn't get to "cut in line" and get paid ahead of other creditors such as credit cards, hospitals, etc.  The bankruptcy code allows the trustee to sue your family member to get that money back.  If this occurs it is likely that your relative will have to hire a lawyer and return the money to the trustee; even if they've already spent it.  There are ways to legally pay back a family member without running afoul of the preferential payment rules.  A competent bankruptcy attorney can guide you though this process without running the risk that your relative will be sued by the trustee. 

June 23, 2007 - Tax Returns Required Under New Bankruptcy Law

     One of the requirements under the new bankruptcy law passed in 2005 is that bankruptcy debtors must provide the trustee in their case a copy of the last tax return they have filed (a tax transcript from the IRS may be provided instead of a tax return).  Although this requirement is not by itself very burdensome, the entire set of small new requirements as a whole operate to drive up the cost and difficulty of the entire bankruptcy process without providing much benefit.  Trustees have said they have no interest in reviewing tax returns for every case as it is not beneficial and simply adds another meaningless task to their checklist.

June 11, 2007 -  Median Income Test and Means Test Are Often Mistakenly Thought of as Being the Same

     The terms Median Income Test and Means Test are often used interchangeably on many websites that provide bankruptcy information.  The truth is that while they are related to each other, they are very different and distinct tests.  The Median Income Test is a test where the potential bankruptcy debtor compares their Current Monthly Income (based on a historical 6 month rolling average) to the median income for their state.  If their income is higher than the median, then they are required to take the Means Test.  The bankruptcy Means Test is a complex mathematical calculation that determines whether a debtor's bankruptcy filing will be presumed to be abusive.  It is important for anyone looking for bankruptcy information to realize that any website, law firm, or individual who does not understand the distinction between the Median Income Test and the Means Test probably does not have a sufficient working knowledge of the Bankruptcy Code to be providing competent advice.

May 28, 2007 -  Most Texas Debtors Lose No Property When Filing Bankruptcy

     A common fear many potential debtors have is losing their property when they file for bankruptcy.  They have heard that filing bankruptcy wipes out your debts, but in exchange you give up all your property.  This is an incorrect oversimplification of a very complex set of bankruptcy laws.  In the Dallas / Fort Worth Texas area most people do not lose property because of a bankruptcy filing.  Texas has a very generous list of exemptions (property that the bankruptcy court can not touch).  Because of these generous exemptions, most debtors in a Texas bankruptcy lose no property what-so-ever as a result of filing bankruptcy.

May 14, 2007 -  Payment Advice Filing Requirement Can Be Satisfied with Declaration In Some Cases

     The Bankruptcy Code requires that debtors file 60 days worth of payment advices (i.e. pay stubs) with the court.  For most debtors this is not a problem.  However, for stay-at-home parents, the self-employed, or the unemployed this has created a problem because they have no payment advices to file.  It is common sense that you can not file what does not exist.  However, the lack of these documents in the court's file can lead to the issuance of a Notice of Deficiency in the bankruptcy case and a potential dismissal of the case.  The solution many bankruptcy practitioners have used is to file a declaration by the debtor, signed under oath, that the required payment advices do not exist.  This allows the court to check this item off their list, and can prevent the issuance of a notice of deficiency.

April 25, 2007 -  Car Designation Order In Bankruptcy Means Test Can Impact Result

     Bankruptcy debtors who are required to take the Means Test are allowed up to two vehicle ownership expense deductions.  For those debtors with two vehicles, the order in which the vehicles are entered can impact the overall test result.  Switching the order of which car is CAR ONE and which is CAR TWO can result in a higher overall vehicle ownership expense deduction.  Bankruptcy attorneys should input the data both ways to determine which order maximizes their client's deductions.

April 11, 2007  - Debtor Confusion Commonplace At Creditor Meetings

     Bankruptcy debtors must attend a creditor meeting as part of their bankruptcy case.  The confusion that often arises during this meeting is mistaking the trustee or hearing officer for the judge.  The person running the meeting may seem like the judge, but in fact they are not.  Bankruptcy debtors should still treat them with respect and courtesy, but debtors should also realize that they have no final decision-making ability.

April 1, 2007 -  Means Test Values Updated

     For all bankruptcy cases filed on or after April 1, 2007, debtors will be required to use updated Census Bureau figures.  These figures determine the appropriate median household income to be used in the Median Income Test and the Means Test.

March 28, 2007 -  Post Bankruptcy Credit Available

     There are many myths surrounding bankruptcy.  One of the most common is that you can't get credit after you file bankruptcy.  Nothing could be further from the truth.  There are many lenders who are eager to extend credit to individuals coming out of bankruptcy.  You may pay a higher interest rate, but credit is available.  Many clients are amazed when within days of their bankruptcy discharge they receive offers for new credit cards and car loans.  If bankruptcy clients wisely choose when and how to use post-bankruptcy credit, they will be well on their way to getting back on track financially.

March 17, 2007 -  Health Care Ombudsman Designation Required in Certain Health Care Related Bankruptcies

     An ombudsman is an individual appointed to receive, investigate, report on, and sometimes resolve complaints against a business, organization, or institution.  In the bankruptcy context, a health-care ombudsman is sometimes appointed when a health-care provider or business files bankruptcy to facilitate patient interaction with the bankruptcy system.  Attorneys should inform their bankruptcy clients involved in providing health care services that they may be required to attend a hearing related to the appointment of a health care ombudsman as part of their bankruptcy case.

March 12, 2007 -  Spouses Who Do Not File Jointly Face Complex Means Test Issues

     Spouses who do not file bankruptcy jointly and are required to take the means test face a variety of unresolved issues.  The non-filing spouse's income is included for purposes of the median income test, but is then "backed out" of the means test calculation.  "Backing out" the non-filing spouse's income, however, is a tricky proposition.  The amount that can be backed out is dependant on the amount that the non-filing spouse contributes to the household expenses.  Whether this amount should be calculated on a pro-rata basis, as a percentage of the spouses' relative incomes, or on the basis of some other metric is unclear.  These hyper-technical details can have significant consequences on the debtor's ability to pass the means test.  Lawyers will, in all likelihood, need to litigate these issues so that some clarity on the proper procedures can be determined.   

March 07, 2007 -  Citigroup Announces That It Will No Longer Use Universal Default Clauses

     Citigroup, a major financial institution and credit-card issuer, has announced that it will cease its practice of including universal default clauses in its credit-card agreements.  Universal default clauses allow Credit Card A to raise your interest rate even though you paid them on time because you had a late payment to Credit Card B.  This creates a situation where one late payment may be all that is needed to raise your interest rate on all your credit cards to the 20 to 30 percent range.  The elimination of this heavy-handed practice by Citigroup is a step in the right direction, but much reform is still needed in the credit-card industry.  Hopefully, other credit-card issuers will follow Citigroup's lead. 

March 06, 2007 -  NACBA Convention To Be Held in Philadelphia

     The National Association of Consumer Bankruptcy Attorneys (NACBA) will hold its fifteenth annual convention in Philadelphia, PA on April 19 to April 22, 2007.   Topics of discussion at the convention will include the much publicized means test, bankruptcy related tax issues, representing military families, the constitutionality of certain bankruptcy code provisions, as well as many other topics of interest to bankruptcy attorneys.

February 20, 2007 -  Seniors Are Fast Growing Segment of Bankrputcy Cases

     Senior citizens are the fastest growing segment of bankruptcy filings.  This increase in the need for bankruptcy protection among seniors is due, in part, to the increased cost of prescription drugs and health care.   When faced with the need to purchase medicine that will keep them alive, but with no or insufficient insurance coverage, it is only natural that seniors turn to credit cards for help.  These are not luxury expenses such as plasma TVs or cruises to Hawaii.  Seniors are literally faced with the life-and-death choice of purchasing medicine on their credit cards or dying.  What choice would you make?

February 1, 2007 -  Means Test Values Updated

     For all bankruptcy cases filed on or after February 1, 2007, debtors will be required to use updated IRS and Census Bureau figures.  These figures determine the expenses for housing, food, transportation, and other items that lawyers and debtors are permitted to use for purposes of calculating the result of the bankruptcy means test.

January 26, 2007 -  Texas Bankruptcy Filings on the Rise

     According to the Administrative Office of the U.S. Courts the third quarter of 2006 saw 10,133 bankruptcy filings in the state of Texas.  This is compared to 8,541 for the second quarter of 2006.  While these numbers are still significantly below the 2005 filing numbers of 31,386 (third quarter) and 26,969 (second quarter), they do indicate that the number of filings are beginning to trend towards a return to normal levels.  Many lawyers report these statistics are in line with what they have been seeing in their own individual practices.

January 20, 2007 -  Texas Leads Country in Foreclosures

     Texas leads the country in foreclosures in December by having 14,915 properties in the foreclosure process.  December is the eighth month in 2006 where Texas has taken the top spot in the country in foreclosures.  Many individuals and families may be forced to seek bankruptcy protection as a result of a looming foreclosure date.   

December 2, 2006 - Many Consumers Wait Until After Holidays to Deal With Their Financial Difficulties

     The holidays can be stressful for any family, but for families with serious financial problems the stress can be overwhelming.  Despite this overwhelming stress, many families decide to wait until after the new year before looking into their financial options, including the possibility of bankruptcy.  This could be a very costly mistake.  It is human nature to want to have a good holiday and then deal with your problems later.  Bankruptcy, however, is very sensitive to time tables and even short delays can have significant negative consequences.  Families in serious financial trouble should, at the very least, speak with a bankruptcy attorney so that they can make an informed choice about whether waiting until after the holidays is a smart move or not.

November 14, 2006 -  Will Democrats New Power Help Bankruptcy Consumers?

     Now that the Democratic party is in control of Congress will there be any relief for consumers who need bankruptcy protection?  In April of 2005, a Republican-controlled Congress pushed through the so-called Bankruptcy Abuse Prevention and Consumer Protection Act.  This "Consumer Protection Act" has hurt consumers by making it more difficult and expensive for deserving families to file for bankruptcy protection.  Unfortunately, with so many other pressing issues facing the country it is unlikely that reforming the
"bankruptcy reform" law will get the attention it deserves.  As a result, deserving families, including many military families, in need of help will continue to suffer.

October 17, 2006 -  Today Marks One Year Anniversary of the New Bankruptcy Laws

     October 17, 2006 marks the one year anniversary of the effective date of the new bankruptcy law passed by Congress in 2005.  After being in effect one year statistical evidence has shown that bankruptcy fraud is not rampant as claimed by the proponents of the law, but rather almost non-existent.  Despite a large initial drop in the number of bankruptcy filings, the number of cases is steadily rising back to normal and expected levels.  The new law might have changed the Bankruptcy Code, but it did not change the fact that hundreds of thousands of families are experiencing difficult financial times due to lay-offs, divorces, or major medical catastrophes.  These families still need help to get back on their feet, and there are still many dedicated bankruptcy attorneys out there ready to do their part.

September 30, 2006 -  Means Test Values Change Effective October 1, 2006

     For all bankruptcy cases filed on or after September 1, 2006, lawyers and debtors will be required to use updated IRS and Census Bureau figures.  These figures determine the allowed expenses for housing, food, transportation, and other items that lawyers and debtors are permitted to use for purposes of completing the bankruptcy means test.

August 21, 2006 -  Internet Bankruptcy Information Can Be Very Misleading

     Those interested in learning more about bankruptcy often start their search on the Web.  While many sites provide extensive information about bankruptcy it is often misleading.  This is not usually because of errors or outright deception, but rather because bankruptcy is a very local affair.  Despite the fact that bankruptcy is a federal matter and the law should be uniform throughout the country, the reality is that it varies greatly from state to state, county to county, and judge to judge.  For example, in Texas most Chapter 7 filers lose no property at all.  This is not true in many other states.  The lesson here is to make sure you know whether the information you are receiving is tailored to the area in which your case will actually be filed.

July 15, 2006 -  Universal Default Clauses May Force Some Consumers Into Bankruptcy

     Universal default clauses allow Credit Card A to raise your interest rate even though you paid them on time because you had a late payment to Credit Card B.  This creates a situation where one late payment may be all that is needed to raise your interest rate on all your credit cards to the 20 to 30 percent range.  When you have someone that was just barely able to pay all their bills at 8 percent interest and you increase their rate to 30 percent the chances of that person needing bankruptcy protection rise significantly.

June 26, 2006 - Bill Collectors Lie To Consumers And Say That Bankruptcy Is No Longer Available

     Some bill collectors are telling consumers that because of the October 2005 changes to the Bankruptcy Code that they can no longer file for bankruptcy.  While it is true that is is more difficult and expensive to file bankruptcy now than in previous years, the overwhelming majority of people who qualified under the old law still qualify for bankruptcy protection under the new law.  Some bill collectors are outright lying to consumers in order to bully them into paying bills they cannot afford and in many instances no longer owe. 

June 12, 2006 - Means Test Deductions For Secured Property Allowed Even If Debtor Intends to Surrender That Property

     A bankruptcy court in the Northern District of Georgia recently ruled that debtors may include as deductions for means-test purposes all secured debt, even if the property securing those debts is to be surrendered.  Section 707(b)(2)(A)(iii) states that a debtor can, in the means-test calculations, deduct payments that are “scheduled as contractually due to secured creditors in each month of the 60 months following the date of the petition.”  The court found that this provision of the bankruptcy code does not require debtors to reaffirm these secured debts in order to be able to take the deductions in the mean test.

June 6, 2006 - Texas Bankruptcy Judge Outraged at Congress

     Texas Bankruptcy Judge Frank R. Monroe in an opinion dismissing a bankruptcy case commented about the new bankruptcy law:  "Can any rational human being make a cogent argument that this makes any sense at all?"

     Other bankruptcy judges have expressed similar opinions.  United States Bankruptcy Judge Keith Lundin opined about the new bankruptcy legislation: "No one has ever seen a piece of garbage like this" and went on to say that "...there's going to be the most fantastic anarchy in bankruptcy courts for years."

May 31, 2006 - 1 in 60 U.S. Households in Bankruptcy

     According to the American Bankruptcy Institute (ABI), one in every sixty households in the United States has filed for bankruptcy.  According to ABI's executive director Sam Gerdano this means that it is probable that "someone in your family, a neighbor down the block or a co-worker in your office is in bankruptcy court."

May 15, 2006 - NACBA Files Suit Challenging New Bankruptcy Law

     The National Association of Consumer Bankruptcy Attorneys (NACBA) has filed a lawsuit in Connecticut challenging the constitutionality of several of the provisions of the new bankruptcy law signed by President Bush in 2005 and which went into effect on October 17, 2005.  One specific issue is the constitutionality of the Debt Relief Agency (DRA) provisions as they relate to attorneys.  

April 11, 2006 - Court Filing Fees Increase Today

     The filing fees charged by courts for filing bankruptcy increase effective April 11, 2006.  The filing fee for Chapter 7 has increased from $274 to $299.  The filing fee for Chapter 13 has increased from $189 to $274.

March 3, 2006 - No IRS Ownership Expense Allowed for Paid-Off Cars

     The United States Trustee has taken the position that in order to take the ownership expense for an automobile the client must have a debt obligation on the vehicle.  In other words, you can't take the ownership deduction for means-test purposes if your car is paid off.  This position penalizes those who are trying to live frugally and within their means, but unfortunately this looks like the position the courts will also take with respect to this issue.

February 17, 2006 - Texas Median Income Figures Adjusted Upward

     The income figures for Texas were recently adjusted upward.  The new figures will provide a slight bit of relief for consumers who are seeking bankruptcy protection.  The increases, however, are only a few percentage points.  But for people at the margin, they will be a welcome change.

January 7, 2006 - Credit Card Minimum Payment Set To Increase

     Credit card minimum payments will soon be increasing for many consumers.  The amount of the increase will vary depending on the issuer, but could as much as double.  If you have a typical credit-card debt load of $9000 and you currently have a 2% minimum payment of $180, your new payment could be as high as $360.  For consumers who were struggling to make the old minimum payment, the new higher minimum payment is simply beyond their reach.

Posting For the Year 2005

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