Filing Bankruptcy: Pros and Cons

Christopher C Carr, Bankruptcy Guest Contributor

By Christopher C. Carr, Esq., Chester County Bankruptcy Lawyer

Tel: 610-380-7969 Email: cccarresq@aol.com Web: carrlaw.org

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Christopher C. Carr , Esq., MBA explains the types of bankruptcy and weighs the pros and cons of filing bankruptcy.

In these troubled economic times many people are having difficulties paying their bills and may be wondering whether a bankruptcy will help them. To examine the various strategies available to avoid bankruptcy, we must first understand what bankruptcy is and what it can and cannot do. The United States Bankruptcy Code offers several types of debt relief. The United States Bankruptcy Code offers two primary paths for consumers:

  • A Chapter 7 Bankruptcy: In a so called “straight” bankruptcy, the Trustee in bankruptcy seeks to liquidate the debtor’s non exempt property and distribute the proceeds to the creditors in order of priority, in exchange for discharge of all of the debtor’s eligible debt. (Exemptions for various property classifications are set out in federal and state law.) However, certain debts such as guaranteed student loans and domestic support obligations are non-dischargeable in bankruptcy. Most 7’s are “no asset” bankruptcies.

Certain higher income debtors who do not meet the new Means Test must instead file a Chapter 13 Bankruptcy.

  • A Chapter 13 “debtor in possession” Bankruptcy: Here, unlike in Chapter 7 proceedings, the debtor retains possession of the assets (hence its nickname). In order to be confirmed by the court, the debtor must prove sufficient income to support a 3-5 year plan wherein payments on secured debt such as mortgages and auto loans (including arrears) and non-dischargeable items continue and unsecured creditors typically get paid a small portion of their debts. For debtors facing mortgage foreclosure, Chapter 13 may be the only choice to halt the process while seeking other remedies within or outside of bankruptcy such as a Home Affordable mortgage modification is obtained. However, recent statistics indicate that only about 35% of all 13 plans are ever completed.

There are overall limits as to how much unsecured and/or secured debt a debtor may have and still utilize Chapter 7 or 13. If either is exceeded then the debtor will have but one alternative if they wish to file for bankruptcy:

  • Chapter 11, a third type of Bankruptcy, is primarily used to help in debt businesses restructure. An example is the bankruptcy from which GM has successfully emerged with the help of a massive US bailout. It is much more complex, time consuming and expensive than Chapter 7 or 13, but is the sole resort for individual debtors with debt which exceeds the limits mentioned above.

Other Advantages to Bankruptcy: The overall goal of every bankruptcy case is to give the debtor a “fresh start.” The “automatic stay” in bankruptcy will apply once your case is filed. This generally halts all collection activities, foreclosures, repossessions, Sherriff’s sales, etc. while in effect.

Disadvantages to Bankruptcy:

  • Many people wish to avoid bankruptcy because of the social stigma perceived to be associated with “going bankrupt” even though it is perfectly legal and in fact is guaranteed by the US Constitution.
  • bankruptcy remains on the debtor’s credit for up to 7 (Chapter 17) or 10 years (Chapter 13) from filing and may interfere with efforts to obtain credit, purchase or refinance a home or even obtain employment. However, it should be noted that most who seek this relief already have impaired credit and, more importantly, in reality new credit is generally extended to debtors who keep their payments current for a year or two following discharge. So, in effect bankruptcy can work to “repair” credit.
  • Homeowners, who have racked up large arrears in their mortgage payments which have to be repaid in full over the 3-5 year plan period in a chapter 13 , may find the payments too high to afford causing the bankruptcy ultimately to be discharged or converted, perhaps thus only delaying the ultimate loss of their home in contrast to a Home Affordable (HAMP) mortgage modification where as the name implies ideally a long term affordable solution is reached.
  • Not all types of debt are dischargable in bankruptcy, a good example being guaranteed student loans.
  • While perhaps not strictly speaking a disadvantage,  there is a substantial waiting period once a bankruptcy has been discharged…the debtor has to wait to file again, the timeframes varying with the type(s) of bankruptcy selected. For this reason, bankruptcy should be considered strategically.  When its gone, its gone, at least for a good long time!

The key point is that each debtor’s situation is unique and deserves special consideration. Further, because the process is hardly ever as smooth as it is supposed to be because of the complexities and pitfalls involved, it is advisable to consult a competent and compassionate attorney who has experience in bankruptcies and/or in negotiating modifications to guide you through the process and help you properly complete the paperwork.

©Christopher C. Carr, Attorney at Law 2009, All Rights Reserved

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality Chester County Bankruptcy Practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Carr, who has over 30 years if diversified experience as an attorney, concentrates his practice on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!

I also provide Mortgage Mod Services.

IMPORTANT NOTE: I am not your bankruptcy lawyer, and nothing within this site creates that relationship.  Bankruptcy law requires that for me to be your lawyer, you and I must have a written contract.  So, unless we both agree in writing, you are not my client. Therefore, nothing written herein is to be relied upon as legal advice such as I might give to a client.

I am a debt relief agency. I help people file for bankruptcy relief under the bankruptcy code.

ABC’s of Chapter 13 Lien Stripping

 

By Christopher C. Carr Esq., Chester County Bankruptcy Attorney (Contact info. Below)

OVERVIEW: The once obscure practice of lien stripping has more recently enabled thousands of homeowners to remove the liens of second and third mortgages forever, while paying only a small percentage of their face value. The result has been to grant a “new lease on life” to many homeowners which is after all the ultimate goal of bankruptcy.

WHAT IS A LIEN STRIP?

Lien Stripping refers to the practice permitted by 11 USC 1322(b), which provides that “wholly undersecured” (don’t worry, this term is explained below) liens against real property may be removed or “stripped,” and the debt to which they relate treated as unsecured in a Chapter 13 Plan of Reorganization. Liens may not be stripped in Chapter 7 cases. Lien stripping however has two distinct, and very desirable, benefits for qualifying Chapter 13 debtors:

(1) At the conclusion of the lien strip the underlying property is no longer be encumbered by the undersecured lien and that creditor cannot prevent the sale or refinancing of the real estate nor deduct anything from the proceeds payable to the seller; and

(2) Instead of having to pay the debt secured by that stripped lien in full, the debtor need only pay the same percentage of the claim as it plans to pay all unsecured creditors – often 10% or less plus applicable trustee fees.

FIRST MORTGAGES ONLY NEED APPLY. 

Lien stripping is permissible only for claims secured by the Debtor’s principal residence because a lien strip modifies the “total package of rights for which the claim holder bargained.”

 

CAN A PARTIAL LIEN STRIP WORK?

No. There is no such thing as a partial lien strip. Bankruptcy Courts everywhere, including the Eastern District of Pennsylvania where Chester County Bankruptcy Attorney Christopher C. Carr, Esq. primarily practices, will only allow a lien to be stripped if it is wholly “undersecured”: that is, the equity remaining after the first mortgage and all other liens on the property that are prior in interest is zero or negative. Since the majority view among the Federal circuits is that the term “undersecured” means that there is some equity to secure the lien, in order to be stripped liens must be wholly unsecured.

QUALIFYING FOR A LIEN STRIP

A lien strip can only be accomplished in the course of a confirmed Chapter 13 plan of reorganization. The practice of lien stripping refers to the splitting  of a secured interest in real or personal property into a secured and unsecured portion. The calculations behind lien stripping are simple:

V – D[- JD] ≤ $0

V: market value of a property

D: debt(s) encumbering that property

JD: Junior debt/TARGET debt (i.e. Second mortgage)

Repeat for each lien, adding “strippable” debt amounts to D. For example, add mortgage debt 2 and mortgage debt 1 to see if a lien strip for mortgage debt 3 is available.

In other words, for a lien to be stripped and the lien holder’s interest treated as unsecured, such that it receives far less than all its money plus interest, the value of the debtor’s property at the time of filing, less the fully-secured non-target debts, must be less than or equal to $0. In a rising real estate market, meeting these requirements used to be challenging, if not downright impossible. However, in market conditions such as those prevailing today where many homeowners are “underwater” as to their first mortgage and have a HELOC or second mortgage and/or even an additional mortgage in third position on top of that, the conditions necessary for a lien strip to take place are relatively straightforward and can sometimes be met without much resistance from the affected creditor, especially if there is a wide disparity between market price and first mortgage debt. [1]

STRIPPING THE LIEN – WHEN, WHERE, HOW, WHAT RESULT?

Federal Appellate circuits follow different approaches when it comes to lien stripping. Some Bankruptcy Courts, for instance, require no more than a listing in the debtor’s bankruptcy petition that bifurcates the creditor’s interest into secured and unsecured portions. Should the creditor fail to timely object, their lien is stripped virtually automatically.

On the other hand, other Courts, such as the Eastern District of Pennsylvania where Chester County Bankruptcy Attorney Christopher C. Carr, Esq. primarily practices, require that the debtor bring a motion to strip the lien. Again, if the creditor fails to respond its lien is stripped. Still other circuits, the most conservative ones, require the debtor to bring a separate adversary case against the creditor whose lien is to be stripped. Often the latter 2 kinds of situations – motions and adversary actions – become fiercely contested and require incredible amounts of preparation as well as costly expert testimony. This kind of attention and resources are required because it is the value of the underlying property that is typically in dispute. This suggests that prudent bankruptcy attorney not counsel his/her client to do a lien strip where there is a lack of solid evidence of a disparity in value vs. debt as this will only lead to litigating disputes over collateral valuation in the bankruptcy court which the bankruptcy client, already hard pressed can ill afford.  See for example: In re Heritage Highgate, Inc.,  Case No. 11-1889, 2012 U.S. App. LEXIS 9698 (3d Cir., May 14, 2012).

 

WHAT ABOUT TAXES?  Can they ALSO be stripped OR UTILISED?

Neither Federal nor State taxes can typically be discharged in bankruptcy and if real estate is sold or transferred following a Bankruptcy filing the taxes must still be paid – regardless of any lien strip action. So, no you cannot strip such taxes. But if properly engineered, the additional lien of unpaid property taxes can be used to create a viable lien strip where none would otherwise exist since they reduce the amount of equity in the debtor’s property.  With the addition of one additional variable the above formula above then becomes:

V – (D+PT)[-JD] ≤ $0   Where PT = property tax lien(s) value.

DO NOT TRY THIS AT HOME:

Since lien stripping can be a contentious area with minefields aplenty the reader is advised to consult an experienced lawyer such as Chester County Bankruptcy Attorney, Christopher C. Carr, Esq.

CONCLUSIONS

While not unrestricted and often misunderstood, lien strips can, and ought to be used to the great advantage of Chapter 13 debtors in the proper circumstances. This will be the case so long as property values continue to be depressed and debtors find themselves squeezed between escalating obligations and dwindling home values.

cCc

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified legal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  


©Christopher C. Carr, Attorney at Law 2009, 2014, All Rights Reserved.


[1] As with so many other bankruptcy concepts, it seems counterintuitive but our Debtor may ultimately be unable to strip the lien of a second mortgage debt because he/she thought they were doing the right thing by conscientiously paying their first mortgage every month. Maybe had they instead spent that money in Aruba or Vegas (LOL) and let the mortgage go into arrears status and the interest, unpaid escrows and penalties build up over time, the increase would perhaps have been sufficient to absorb a higher market price.

Chapter 13 Lien Strip A to Z

By Christopher C. Carr Esq., Chester County Bankruptcy Attorney (Contact info. Below)

OVERVIEW: The once obscure practice of lien stripping has more recently enabled thousands of homeowners to remove the liens of second and third mortgages forever, while paying only a small percentage of their face value. The result has been to grant a “new lease on life” to many homeowners which is after all the ultimate goal of bankruptcy.

WHAT IS A LIEN STRIP?

Lien Stripping refers to the practice permitted by 11 USC 1322(b), which provides that “wholly undersecured” (don’t worry, this term is explained below) liens against real property may be removed or “stripped,” and the debt to which they relate treated as unsecured in a Chapter 13 Plan of Reorganization. Liens may not be stripped in Chapter 7 cases. Lien stripping however has two distinct, and very desirable, benefits for qualifying Chapter 13 debtors:

(1) At the conclusion of the lien strip the underlying property is no longer be encumbered by the undersecured lien and that creditor cannot prevent the sale or refinancing of the real estate nor deduct anything from the proceeds payable to the seller; and

(2) Instead of having to pay the debt secured by that stripped lien in full, the debtor need only pay the same percentage of the claim as it plans to pay all unsecured creditors – often 10% or less plus applicable trustee fees.

FIRST MORTGAGES ONLY NEED APPLY. 

Lien stripping is permissible only for claims secured by the Debtor’s principal residence because a lien strip modifies the “total package of rights for which the claim holder bargained.”

 

CAN A PARTIAL LIEN STRIP WORK?

No. There is no such thing as a partial lien strip. Bankruptcy Courts everywhere, including the Eastern District of Pennsylvania where Chester County Bankruptcy Attorney Christopher C. Carr, Esq. primarily practices, will only allow a lien to be stripped if it is wholly “undersecured”: that is, the equity remaining after the first mortgage and all other liens on the property that are prior in interest is zero or negative. Since the majority view among the Federal circuits is that the term “undersecured” means that there is some equity to secure the lien, in order to be stripped liens must be wholly unsecured.

QUALIFYING FOR A LIEN STRIP

A lien strip can only be accomplished in the course of a confirmed Chapter 13 plan of reorganization. The practice of lien stripping refers to bifurcation of a secured interest in real or personal property into a secured and unsecured portion. The calculations behind lien stripping are simple:

V – D[- JD] ≤ $0

V: market value of a property

D: debt(s) encumbering that property

JD: Junior debt/TARGET debt (i.e. Second mortgage)

Repeat for each lien, adding “strippable” debt amounts to D. For example, add mortgage debt 2 and mortgage debt 1 to see if a lien strip for mortgage debt 3 is available.

In other words, for a lien to be stripped and the lien holder’s interest treated as unsecured, such that it receives far less than all its money plus interest, the value of the debtor’s property at the time of filing, less the fully-secured non-target debts, must be less than or equal to $0. In a rising real estate market, meeting these requirements used to be challenging, if not downright impossible. However, in market conditions such as those prevailing today where many homeowners are “underwater” as to their first mortgage and have a HELOC or second mortgage and/or even an additional mortgage in third position on top of that, the conditions necessary for a lien strip to take place are relatively straightforward and can sometimes be met without much resistance from the affected creditor, especially if there is a wide disparity between market price and first mortgage debt. [1]

STRIPPING THE LIEN – WHEN, WHERE, HOW, WHAT RESULT?

Federal Appellate circuits follow different approaches when it comes to lien stripping. Some Bankruptcy Courts, for instance, require no more than a listing in the debtor’s bankruptcy petition that bifurcates the creditor’s interest into secured and unsecured portions. Should the creditor fail to timely object, their lien is stripped virtually automatically.

On the other hand, other Courts, such as the Eastern District of Pennsylvania where Chester County Bankruptcy Attorney Christopher C. Carr, Esq. primarily practices, require that the debtor bring a motion to strip the lien. Again, if the creditor fails to respond its lien is stripped. Still other circuits, the most conservative ones, require the debtor to bring a separate adversary case against the creditor whose lien is to be stripped. Often the latter 2 kinds of situations – motions and adversary actions – become fiercely contested and require incredible amounts of preparation as well as costly expert testimony. This kind of attention and resources are required because it is the value of the underlying property that is typically in dispute. This suggests that prudent bankruptcy attorney not counsel his/her client to do a lien strip where there is a lack of solid evidence of a disparity in value vs. debt as this will only lead to litigating disputes over collateral valuation in the bankruptcy court which the bankruptcy client, already hard pressed can ill afford.  See for example: In re Heritage Highgate, Inc.,  Case No. 11-1889, 2012 U.S. App. LEXIS 9698 (3d Cir., May 14, 2012).

 

WHAT ABOUT TAXES?  Can they ALSO be stripped OR UTILISED?

Neither Federal nor State taxes can typically be discharged in bankruptcy and if real estate is sold or transferred following a Bankruptcy filing the taxes must still be paid – regardless of any lien strip action. So, no you cannot strip such taxes. But if properly engineered, the additional lien of unpaid property taxes can be used to create a viable lien strip where none would otherwise exist since they reduce the amount of equity in the debtor’s property.  With the addition of one additional variable the above formula above then becomes:

V – (D+PT)[-JD] ≤ $0   Where PT = property tax lien(s) value.

DO NOT TRY THIS AT HOME:

Since lien stripping can be a contentious area with minefields aplenty the reader is advised to consult an experienced lawyer such as Chester County Bankruptcy Attorney, Christopher C. Carr, Esq.

CONCLUSIONS

While not unrestricted and often misunderstood, lien strips can, and ought to be used to the great advantage of Chapter 13 debtors in the proper circumstances. This will be the case so long as property values continue to be depressed and debtors find themselves squeezed between escalating obligations and dwindling home values.

cCc

Law Offices of Christopher C. Carr, MBA,  P.C., a quality Chester County Bankruptcy Practice, is located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Carr concentrates his practice on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield, Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Oxford, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester, Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!

 

©Christopher C. Carr, Attorney at Law 2009, 2014, All Rights Reserved.


[1] As with so many other bankruptcy concepts, it seems counterintuitive but our Debtor may ultimately be unable to strip the lien of a second mortgage debt because he/she thought they were doing the right thing by conscientiously paying their first mortgage every month. Maybe had they instead spent that money in Aruba or Vegas (LOL) and let the mortgage go into arrears status and the interest, unpaid escrows and penalties build up over time, the increase would perhaps have been sufficient to absorb a higher market price.

By Christopher C. Carr Esq., Chester County Bankruptcy Attorney (Contact info. Below)

OVERVIEW: The once obscure practice of lien stripping has more recently enabled thousands of homeowners to remove the liens of second and third mortgages forever, while paying only a small percentage of their face value. The result has been to grant a “new lease on life” to many homeowners which is after all the ultimate goal of bankruptcy.

WHAT IS A LIEN STRIP?

Lien Stripping refers to the practice permitted by 11 USC 1322(b), which provides that “wholly undersecured” (don’t worry, this term is explained below) liens against real property may be removed or “stripped,” and the debt to which they relate treated as unsecured in a Chapter 13 Plan of Reorganization. Liens may not be stripped in Chapter 7 cases. Lien stripping however has two distinct, and very desirable, benefits for qualifying Chapter 13 debtors:

(1) At the conclusion of the lien strip the underlying property is no longer be encumbered by the undersecured lien and that creditor cannot prevent the sale or refinancing of the real estate nor deduct anything from the proceeds payable to the seller; and

(2) Instead of having to pay the debt secured by that stripped lien in full, the debtor need only pay the same percentage of the claim as it plans to pay all unsecured creditors – often 10% or less plus applicable trustee fees.

FIRST MORTGAGES ONLY NEED APPLY. 

Lien stripping is permissible only for claims secured by the Debtor’s principal residence because a lien strip modifies the “total package of rights for which the claim holder bargained.”

 

CAN A PARTIAL LIEN STRIP WORK?

No. There is no such thing as a partial lien strip. Bankruptcy Courts everywhere, including the Eastern District of Pennsylvania where Chester County Bankruptcy Attorney Christopher C. Carr, Esq. primarily practices, will only allow a lien to be stripped if it is wholly “undersecured”: that is, the equity remaining after the first mortgage and all other liens on the property that are prior in interest is zero or negative. Since the majority view among the Federal circuits is that the term “undersecured” means that there is some equity to secure the lien, in order to be stripped liens must be wholly unsecured.

QUALIFYING FOR A LIEN STRIP

A lien strip can only be accomplished in the course of a confirmed Chapter 13 plan of reorganization. The practice of lien stripping refers to bifurcation of a secured interest in real or personal property into a secured and unsecured portion. The calculations behind lien stripping are simple:

V – D[- JD] ≤ $0

V: market value of a property

D: debt(s) encumbering that property

JD: Junior debt/TARGET debt (i.e. Second mortgage)

Repeat for each lien, adding “strippable” debt amounts to D. For example, add mortgage debt 2 and mortgage debt 1 to see if a lien strip for mortgage debt 3 is available.

In other words, for a lien to be stripped and the lien holder’s interest treated as unsecured, such that it receives far less than all its money plus interest, the value of the debtor’s property at the time of filing, less the fully-secured non-target debts, must be less than or equal to $0. In a rising real estate market, meeting these requirements used to be challenging, if not downright impossible. However, in market conditions such as those prevailing today where many homeowners are “underwater” as to their first mortgage and have a HELOC or second mortgage and/or even an additional mortgage in third position on top of that, the conditions necessary for a lien strip to take place are relatively straightforward and can sometimes be met without much resistance from the affected creditor, especially if there is a wide disparity between market price and first mortgage debt. [1]

STRIPPING THE LIEN – WHEN, WHERE, HOW, WHAT RESULT?

Federal Appellate circuits follow different approaches when it comes to lien stripping. Some Bankruptcy Courts, for instance, require no more than a listing in the debtor’s bankruptcy petition that bifurcates the creditor’s interest into secured and unsecured portions. Should the creditor fail to timely object, their lien is stripped virtually automatically.

On the other hand, other Courts, such as the Eastern District of Pennsylvania where Chester County Bankruptcy Attorney Christopher C. Carr, Esq. primarily practices, require that the debtor bring a motion to strip the lien. Again, if the creditor fails to respond its lien is stripped. Still other circuits, the most conservative ones, require the debtor to bring a separate adversary case against the creditor whose lien is to be stripped. Often the latter 2 kinds of situations – motions and adversary actions – become fiercely contested and require incredible amounts of preparation as well as costly expert testimony. This kind of attention and resources are required because it is the value of the underlying property that is typically in dispute. This suggests that prudent bankruptcy attorney not counsel his/her client to do a lien strip where there is a lack of solid evidence of a disparity in value vs. debt as this will only lead to litigating disputes over collateral valuation in the bankruptcy court which the bankruptcy client, already hard pressed can ill afford.  See for example: In re Heritage Highgate, Inc.,  Case No. 11-1889, 2012 U.S. App. LEXIS 9698 (3d Cir., May 14, 2012).

 

WHAT ABOUT TAXES?  Can they ALSO be stripped OR UTILISED?

Neither Federal nor State taxes can typically be discharged in bankruptcy and if real estate is sold or transferred following a Bankruptcy filing the taxes must still be paid – regardless of any lien strip action. So, no you cannot strip such taxes. But if properly engineered, the additional lien of unpaid property taxes can be used to create a viable lien strip where none would otherwise exist since they reduce the amount of equity in the debtor’s property.  With the addition of one additional variable the above formula above then becomes:

V – (D+PT)[-JD] ≤ $0   Where PT = property tax lien(s) value.

DO NOT TRY THIS AT HOME:

Since lien stripping can be a contentious area with minefields aplenty the reader is advised to consult an experienced lawyer such as Chester County Bankruptcy Attorney, Christopher C. Carr, Esq.

CONCLUSIONS

While not unrestricted and often misunderstood, lien strips can, and ought to be used to the great advantage of Chapter 13 debtors in the proper circumstances. This will be the case so long as property values continue to be depressed and debtors find themselves squeezed between escalating obligations and dwindling home values.

cCc

Law Offices of Christopher C. Carr, MBA,  P.C., a quality Chester County Bankruptcy Practice, is located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Carr concentrates his practice on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield, Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Oxford, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester, Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!

 

©Christopher C. Carr, Attorney at Law 2009, 2014, All Rights Reserved.


[1] As with so many other bankruptcy concepts, it seems counterintuitive but our Debtor may ultimately be unable to strip the lien of a second mortgage debt because he/she thought they were doing the right thing by conscientiously paying their first mortgage every month. Maybe had they instead spent that money in Aruba or Vegas (LOL) and let the mortgage go into arrears status and the interest, unpaid escrows and penalties build up over time, the increase would perhaps have been sufficient to absorb a higher market price.

HOW TO SUCCEED WITH YOUR MORTGAGE MOD USING A CHAPTER 13 BANKRUPTCY MORTGAGE MODIFICATION MEDIATION PROGRAM

By Christopher C. Carr, Esq., Chester County Bankruptcy Lawyer Tel: 610-380-7969 Email: cccarresq@aol.com contact-form][contact-field label='Name' type='name' required='1'/][contact-field label='Email' type='email' required='1'/][contact-field label='Website' type='url'/][contact-field label='Comment' type='textarea' required='1'/][/contact-form] ASSET PROTECTION AND HOME RESCUE USING  USING A CHAPTER 13 BANKRUPTCY MORTGAGE MODIFICATION MEDIATION PROGRAM . I am admitted to practice in the Middle District of Pennsylvania, which recently instituted a CHAPTER 13 BANKRUPTCY MORTGAGE MODIFICATION MEDIATION PROGRAM. These court sanctioned programs (not available in all jurisdictions) have been demonstrated to work where HAMP does not.   Why?  Because, under Federal Law, if a bankruptcy judge orders parties to be referred to mediation, the parties are legally bound to mediate in good faith.  This legal duty to act in good faith does not exist in many state courts, including Pennsylvania.  This means that in state court, a mortgage company doesn’t have to justify denying your modification, and it can lie about not getting proper documentation (when it did) or your failing the results of its underwriting analysis (when you actually qualify). Underwriters for the loan servicers are the ones who actually decide whether or not to grant a modification to a customer.  Outside of bankruptcy, underwriters routinely say, “No,” no reason is or needs be given.  The truth is that mortgage companies do not want to modify your mortgage.  They are in the business of making mortgages not remaking them. In bankruptcy court, in contrast to state court, “good faith” requires the mortgage servicer to provide a bona fide reason to deny a mortgage modification, and in reality, they can almost never come up with an honest reason to turn down a homeowner.  Thus, they will, if begrudgingly, say, “Yes” for fear of sanctions. Can a mortgage servicer really be sanctioned for denying a mortgage mod?  Sure thing and they can be jaw droppers!  For example, recently, in Florida (another state with bankruptcy mediation), Homeward Residential, a national mortgage servicing company, failed to act in good faith during the mediation process.  It was ordered  by a local bankruptcy judge to pay more than $18,000 in punitive damages, sanctions and debtor’s attorney fees virtually immediately  for failing to act in good faith.  See Sanctions Order against Homeward Residential! Furthermore, these programs unlike HAMP generally do not have an income cutoff component so they can be used by higher income families to protect their assets using bankruptcy. There is no “Means” test for a 13.  And contrary to popular belief you don’t have to be bankrupt (penniless) to file a chapter 13 bankruptcy…you just have to meet certain limitations on maximum secured and unsecured debt. So, stop begging your mortgage servicer for a loan modification, only to get turned down.  If you live within the confines of the MDPA on call me at 610-380-7969 for a FREE consultation me and ask about the Chapter 13 Mortgage Modification Mediation Program instead.

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality  bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  


Not Legal Advice.

©Christopher C. Carr, Attorney at Law 2013, All Rights Reserved.

Credit being Properly Reported AFTER Bankruptcy? How to Find Out.

By Christopher C. Carr, Esq., Chester County Bankruptcy Lawyer,  After your Chapter 7 or 13 Bankruptcy Case is discharged, you will receive an Order of Discharge from the Courts in the mail. However, That does not mean that your credit is being properly reported to/by the credit bureaus.  Fixing any errors is up to you.  Here are the steps:

  1. 60-90 days after you receive the discharge, you should call the number provided on the www.annualcreditreport.com site and order your credit reports.  (Consumers are entitled to a free credit report every year or sooner when a negative decision is made by a creditor relying on a credit report.) You will see an option to download the report or to view it on the internet.  You should request your report be mailed to you by each of the three credit reporting agencies EquifaxExperian, and Transunion.   If you are married and filed a joint bankruptcy, both of the spouses must request their own reports.  There are many websites that will claim to be “free” but will typically start assessing a monthly fee after a trial period…don’t fall for it: www.annualcredi treport.com is the only such site authorized by federal law to provide truly free reports.
  2. You will also want to get additional reports from Telecheck, Early Warning Services, and Chexsystem if you have ever had a problem with a checking account or overdrafts.  These are the agencies that banks and credit unions rely on when the bank or credit union is making a decision about whether you can open an account with them.
  3. So, you are now up to six different reports and if married multiply this by 2.  However the review you will need to do is actually rather straightforward.  Look for a line under each of the creditors that indicates whether a balance is due.  That balance should read ZERO (unless it is a debt that is not dischargeable by law, like court ordered support, taxes, criminal fines or penalties).  There may or may not be a line saying “Chapter 7 Bankruptcy” or “Chapter 13 Bankruptcy”.  These statements refer to the reason why it is no longer a debt.
  4. If any of your creditors is still listing a balance, then the next step is to dispute the report of that creditor.  The Federal Trade Commission offers a sample dispute letter to consumers.  The sample is here.   You may alternatively use the form supplied with the report (usually found near the end of the report.)  Also send a copy of the letter to the creditor who is reporting inaccurate information.   And please, make and retain in your files two extra copies (one for your file and one for your attorney). Note that if more than one entity is reporting the debt improperly, they each must be notified separately.
  5. When a consumer disputes a credit report, the agency by law must investigate.  The creditor can either verify the accuracy, update or remove the information.   The credit reporting agency has deadlines for their response to the consumer. Generally the wrongly reported debt will now be off your report.
  6. However, if a creditor verifies the report (that is, wrongfully indicates the money is still due and owing), you should seek legal advice promptly. This is likely a violation of the discharge order of the bankruptcy court. There may also be a Fair Credit Reporting Act violation.  Your lawyer may suggest a lawsuit against the original creditor, the debt collector (if applicable) and/or the credit reporting agency.  Only a lawyer experienced in these kinds of cases can properly evaluate the situation and provide advice about your options.
  7. Just to make sure your credit is being reported correctly you may want to order your reports again in a year or whenever you are again eligible for a free report from www.annualcredi treport.com. Repeat the process above as needed.

Summary:

  1. Order your credit reports 60-80 days after your Order of Discharge
  2. Order additional reports for problem with checking account or overdrafts
  3. Carefully review  your credit reports
  4. Dispute any balances that are no longer owed with both the original creditor and the credit reporting agency.
  5. Review  responses promptly
  6. If the response says you still owe the debt, seek legal advice from an experienced attorney.
  7. Repeat in a year

This is but one of several steps I recommend you take after your bankruptcy is concluded.  For other actions you should take,  see my blog here 

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

 

341 Meeting Readiness

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By Attorney Christopher Carr, a Chester County bankruptcy attorney.

Tel: 610-380-7969 Email: cccarresq@aol.com WHAT IS THE 341 MEETING OF CREDITORS? Regardless of whether you file a Chapter 7 bankruptcy or Chapter 13 bankruptcy, you will be required to attend a “Meeting of Creditors” or a 341 hearing as attorneys call it. THIS IS A MISNOMER….IT IS NOT REALLY A HEARING! It has that name because it is held under oath (see below.) It is scheduled about 30‐45 days after your case is filed. Though it is called a “Meeting of Creditors,” creditors rarely attend. But the Trustee is there and HE represents the creditors! You, your attorney, and the trustee attend this meeting. It can seem quite intimidating if you do not know what to expect, but the 341 hearing is actually a fairly informal meeting designed to help the Trustee better understand what’s happening in your bankruptcy. A NOTE ON TIMING OF TRUSTEE PAYMENTS FOR CHAPTER 13 CLIENTS: Remember that your first payment to the Trustee is due THIRTY (30) DAYS AFTER YOUR PETITION IS FILED, irrespective of when the 341 is held.  WHAT TO EXPECT:  There will be a pile of Bankruptcy Information Sheets at the front of the room. Take one and read it.  You will be asked if you did (see below.) You will sit at a desk or table with your bankruptcy lawyer and the Trustee. Other people will be in the room with you, generally other bankruptcy filers and their lawyers. You will be asked first off to state your name and address and verify your identity by providing your social security card and drivers license. IF YOU DO NOT HAVE YOUR ORIGINAL SOCIAL SECURITY CARD AND SECOND FORM OF ID, THE MEETING WILL NOT BE HELD AND EVERYONE’S TIME WILL HAVE BEEN WASTED SO DON”T LEAVE IT AT HOME OR EXPECT A COPY TO DO. BRING THAT TATTERED ORIGINAL AND IF YOU DON”T HAVE ONE ORDER IT FROM THE SS OFFICE. The meeting will be recorded. The Trustee will start a tape recorder going. You will be sworn in; i.e. raise right hand solemnly swear and affirm to tell the truth. Dress is business casual for you. Be well groomed. I will be in my “lawyer suit” as will the Trustee, but you are not expected to wear one.  Be on time.  It may appear that I am running late but that is because I have a better idea of when the 341 will start than you do! Try to relax! WHAT CAN THE TRUSTEE ASK AT THE 341 MEETING? The trustee will ask you some basic questions about your bankruptcy.  Here are some of the common questions that trustees ask during the meeting. They are in no particular order. These are not all of the questions that the Trustee could ask, and he/she will not ask every question on this list. In other words, this is a very generic list. The items that are almost always asked are highlighted.

  • Did you sign the petition and the schedules your attorney is showing you?
  • Have you read the bankruptcy information sheet?
  • Did you review the bankruptcy petition and each of the schedules and the statement of financial affairs (SOFA). Is the information correct? The answer is always an assured “YES” because you will have typically signed the documents in my office and we will have gone over all of them in detail at that time.
  • Are there any corrections that need to be made to the Schedules?  There should be none.  See my piece on the importance of full disclosure within the Bankruptcy  Petition.
  • Did you list all income, assets, and debts on the Schedules? The answer is always an assured “YES” because you will have typically signed the documents in my office and we will have gone over all of them in detail at that time.
  • Have you filed all your taxes? Are the tax returns you supplied to the trustee true, correct and complete, including all schedules and W2s? (Typically we will have filed these beforehand.)
  • Are you entitled to any tax refunds?  This one is VERY popular around tax time. You and your Attorney should have discussed this one and its ramifications before the 341.
  • Have you previously filed bankruptcy? If so when?
  • Why are you filing bankruptcy?  You can be a bit creative here but see below.
  • Do you expect to receive an inheritance or property?
  • Are you a party to any law suits?
  • Do you have any domestic support obligations?
  • Have you have sold, transferred, or given away any property in the prior four years?
  • How long have you lived in Pennsylvania?
  • What do you plan to do with your house, cars, or other personal property?
  • Are you employed? What do you do?
  • How much do you earn?
  • Is your employment the same as when you filed?
  • Do you own your own home?
  • Do you own any motor vehicles? What are these?
  • Please provide appraisals for your cars and home. (Typically we will have filed these beforehand.)
  • Please provide insurance declaration pages for your home if owned and cars. (Typically we will have filed these beforehand.)
  • Do you have any retirement funds (IRA, Roth IRA, 401K etc.)?
  • Does anyone owe you money?
  • Is anyone holding money for you?

GENERAL TIPS AND CAVEATS: It is normal to be a bit nervous going into the 341 but just answer the questions put to you fully and honestly and be courteous to one and all! Do not over answer, the Trustee does not need to hear your life story. All of you financial information should be properly presented in the bankruptcy petition and there is no sense in trying to hide something from the Trustee. If you are uncooperative it may motivate the Trustee to investigate or scrutinize your petition further which will only mean more time and effort for you and your attorney. Always remember that the Trustee may act friendly but he is NOT your friend.  He represents the unsecured creditors and his job is to maximize their return from the bankruptcy (not your own). He gets paid a commission on assets he recovers from Debtors for them. I am on a first name basis with the Trustee but that does not mean we are friends! The time to report undisclosed assets, that big tax refund, debts to family or friends, that new job or the 1000 shares of Google.com or that partnership you forgot about is NOT at the 341. If you wear a big diamond ring to the 341 and didn’t disclose it, expect trouble! Other than that type of thing you have nothing to worry about! Should you have concerns about such matters you should be asking me about them NOW! See my piece on the importance of full disclosure within the Bankruptcy Petition.

 

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

Not Legal Advice. Copyright © 2010, 2014 by Christopher C. Carr, Esq., All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement.

Web:westchesterbankruptcyattorney.orgBlog: christophercarrlaw.wordpress.com Member: National Association of Consumer Bankruptcy Attorneys, Phi Beta Kappa & Beta Gamma Sigma.*************************************** “WE SAVE HOMES”

This is a Federally Designated Debt Relief Agency which is proud to assist individuals in need in filing for bankruptcy protection.


[1] Up to ½ hour.

Prepared 2‐25‐2014.

When Should You Talk To A Bankruptcy Lawyer?

Attorney Christopher Carr, a Chester County bankruptcy attorney. Tel: 610-380-7969 Email: cccarresq@aol.com

In Chancery

In Chancery

Maybe the best approach to the question is to talk about when is not the best time to talk to a bankruptcy lawyer.  You were served with the foreclosure notice 6 months ago and the mortgage company has been refusing your payments and now your home is to be sold at a sheriff’s sale tomorrow.  Your car has just been repossessed and your job is now in jeopardy since you do not have transportation to work. These are bad times to be talking with a bankruptcy attorney.  Not because a bankruptcy attorney can’t still help you.  An “emergency” bankruptcy filing can still possibly help you save your home or maybe your car can be returned to you.  It is a bad time because had you consulted with a bankruptcy attorney sooner, a different plan to help you deal with your debt issues may have been available.  That is, while we may still be able to save your home in the short term, your bankruptcy may fail over the longer term whereas had you taken action earlier, a plan could have been devised to save it long term. So when should you talk to a bankruptcy lawyer?  HERE ARE SOME bASIC GUIDES: You know your finances are not what they should be.  You know that you are falling behind on your bills or are struggling to make ends meet each month.  You are juggling, you often have to choose between putting food on the table and paying your credit cards in full. You pay one card one month but not the next so you can pay another.   Or maybe you know that, even though you are current on your bills, there will be a  disruption in your income coming:  Maybe an operation that will require you or your spouse to be out of work for a time or a coming labor union strike. These are better times to be exploring options. Talk to an a compassionate, experienced, knowledgeable attorney who can look at your particular situation before absolute disaster strikes, before you are about to lose your home, car or possessions on the morrow! And it is important to recognize that ironically you must have money to file bankruptcy. If you wait till the axe has fallen, you likely will not have the funds to file:  As Max Gardner, Esq., a keen observer of trends in bankruptcy recently noted regarding the recent fall off in bankruptcy filings: A substantial number of consumers who need to file are simply too broke to file. And, those consumers who have lost homes to foreclosure during the Great Recession simply no longer care.  Simply stated, as many consumers who have lost hope for finding new employment have also lost the need for bankruptcy relief. A skilled bankruptcy lawyer can help you plan for a future filing before you reach this point of despair.  He or she can help you prioritize to help you keep things that are important to you. If the house is most important, then in order to afford the house, perhaps a vehicle can be surrendered and a less expensive vehicle obtained.  Or, the bankruptcy lawyer may tell you to stop paying your credit card or pre-Obamacare medical bills and use the money to make sure that your house payment is made.  This can ensure that you are current on your house for a bankruptcy filing so that you do not have to pay more money for mortgage arrears or that you can file a chapter 7 with a “walk through”. Forewarned is forearmed, as they say!  Merely talking to a bankruptcy lawyer does not commit you to a bankruptcy filing and many will talk to you initially for free or at a reduced charge What do you have to lose other than your current lack of knowledge?  It is not infrequently the case that we will either decide the timing is not yet ripe for a bankruptcy or that some other tool at our disposal is a better option for your particular situation.  While every case is unique, the bankruptcy lawyer will have had experience with cases like yours in the past that will have shown him or her pitfalls of various approaches both within and outside bankruptcy. For example, certain types of debt and liens which cannot be wiped out in a Chapter 7 can be discharged or removed as the case may be in a Chapter 13. Or perhaps he will guide you in the direction of combining bankruptcy with a mortgage modification to drive down your monthly payment to the mortgage company outside the bankruptcy perhaps even to the point where you ultimately can leave bankruptcy early. The alternatives to bankruptcy could include debt settlement; debt consolidation or even debt litigation. The debt settlement company (DSC) may promise over the radio that they can knock 50% off your debt but they cannot litigate or file a bankruptcy case for you. And they will not defend you if one or more of your creditors brings suit while you are in the settlement process.  A debt consolidation company may say that their solution is the most efficient  but they cannot litigate or file a bankruptcy case for you nor generally speaking can they even reduce your debt as can the DSC.  An attorney who litigates but does not file bankruptcy cases and does not have a financial background as do I may be extraordinarily skilled in the courtroom but is ill equipped to see your bigger debt picture and likely will say litigating a single debt (a costly alternative) is best when the debt could have been wiped out with a lot of other debt in bankruptcy.  An unbiased bankruptcy attorney will be part financial analyst and advisor and can lay out all avenues and recommend a path according to your needs. So, when should you talk to a bankruptcy attorney?  Many will hide their head in the sand but the early bird gets the worm…The clear answer is sooner as opposed to later.  Bankruptcy is not for everyone nor is it intended to be.  But if you have debts, and they seem out of hand, a thorough analysis of your finances should include a visit with an experienced bankruptcy attorney.

Law Offices of Christopher C. Carr, MBA,  P.C., owned and managed by Attorney Carr since 1997, a quality Chester County Bankruptcy Atttorney, with his practice located in  Valley Township, west of Coatesville, Pennsylvania, where Carr, who has over 30 years of diversified legal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!
Not Legal Advice.

©Christopher C. Carr, Attorney at Law 2013, All Rights Reserved.

 

THREE STRIKES AND YOU ARE OUT

By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

 One mistake does not a bad faith petition make perhaps but 3 may well take you over the edge:  Rule of Thumb: 1 mistake is a mistake, but 2 mistakes is suspect, and 3 is concealment.  In fact, there is a great letter from Judge Jaroslovsky in the 9th circuit out of California, which was written to the debtor attorneys in his district.  The text of the letter is set forth below. He was trying to reign in some of the rampant petition amendment issues taking place due to the sloppy legal work going on in his district but his words and wisdom have general application.

So let’s stay out of trouble, please tell me EVERYTHING and let me decide.  As you can see below, I will almost always decide in FAVOR of disclosure but there are ways of dealing with such things that you don’t know about and I won’t either unless you “spill the goods” now not after it is too late. For more information see my blog on this topic HERE. An open letter for debtors and their counsel: I have noticed a disturbing trend among debtors and their counsel to treat the schedules and statement of affairs as “working papers” which can be freely amended as circumstances warrant and need not contain the exact, whole truth.  Notwithstanding execution under penalty of perjury, debtors and their counsel seem to think that they are free to argue facts and values not contained in the schedules or even directly contrary to the schedules. Some debtors have felt justified signing a statement that they have only a few, or even a single creditor, in order to file an emergency petition, knowing full well that the statement is false.  Whatever your attitude is toward the schedules, you should know that as far as I am concerned they are the sacred text of any bankruptcy filing.  There is no excuse for them not being 100% accurate and complete.  Disclosure must be made to a fault.  The filing of a false schedule is a federal felony, and I do not hesitate to recommend prosecution of anyone who knowingly files a false schedule. I have no idea where anyone got the idea that amendments can cure false schedules.  The debtor has an obligation to correct schedules he or she knows are false, but amendment in no way cures a false filing.  Any court may properly disregard subsequent sworn statements at odds with previous sworn statements.  I give no weight at all to amendments filed after an issue has been raised. As a practical matter, where false statements or omissions have come to light due to investigation by a creditor or trustee, it is virtually impossible for the debtor to demonstrate good faith in a Chapter 13 or entitlement to discharge in a Chapter 7 case.  I strongly recommend that any of you harboring a cavalier attitude toward the schedules replace it with a good healthy dose of paranoia. (my emph.)   /s/ Judge Alan Jaroslovsky U.S. Bankruptcy Judge Northern District of California, Santa Rosa Division.

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  


©Christopher C. Carr, Attorney at Law 2013, All Rights Reserved.

FIXING YOUR CREDIT AFTER A BANKRUPTCY DISCHARGE

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By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

Tel: 610-380-7969 Email: cccarresq@aol.com Web: westchesterbankruptcyattorney.org

In my prior article on the topic of post discharge activities, I discuss 11 different areas for your attention.  Below, I focus in on just one of these: credit repair.

You have received an Order of Discharge from the Courts. That does not mean that your credit is being properly reported to/by the credit bureaus however.  Fixing any errors is up to you.  Here are the steps:

  1. 60-90 days after you receive the discharge, you should call the number provided on the www.annualcreditreport.com site and order your credit reports.  (Consumers are entitled to a free credit report every year or when a negative decision is made by a creditor relying on a credit report.) You will see an option to download the report or to view it on the internet.  You should request your report be mailed to you by each of the three credit reporting agencies Equifax, Experian, and Transunion.   If you are married and filed a joint bankruptcy, both of the spouses must request their own reports.  There are many websites that will claim to be “free” but will typically start assessing a monthly fee after a trial period…don’t fall for it: www.annualcredi treport.com is the only such site authorized by federal law to provide truly free reports.
  2. You will also want to get additional reports from Telecheck, Early Warning Services, and Chexsystem if you have ever had a problem with a checking account or overdrafts.  These are the agencies that banks and credit unions rely on when the bank or credit union is making a decision about whether you can open an account with them.
  3. So, you are now up to six different reports and if married multiply this by 2.  However the review you will need to do is actually rather straightforward.  Look for a line under each of the creditors that indicates whether a balance is due.  That balance should read ZERO (unless it is a debt that is not dischargeable by law, like court ordered support, taxes, criminal fines or penalties).  There may or may not be a line saying “Chapter 7 Bankruptcy” or “Chapter 13 Bankruptcy”.  These statements refer to the reason why it is no longer a debt.
  4. If any of your creditors is still listing a balance, then the next step is to dispute the report of that creditor.  The Federal Trade Commission offers a sample dispute letter to consumers.  [The sample is here. ] You may alternatively use the form supplied with the credit report (usually found near the end of the report.)  Also send a copy of the letter to the creditor who is reporting inaccurate information.   And please, make and retain in your files two extra copies (one for your file and one for your attorney). Note that if more than one entity is reporting the debt improperly, they each must be notified separately.
  5. When a consumer disputes a credit report, the agency by law must investigate.  The creditor can either verify the accuracy, update or remove the information.   The credit reporting agency has deadlines for their response to the consumer. Generally the wrongly reported debt will now be off your report.
  6. However, if a creditor verifies the report (that is, wrongfully indicates the money is still due and owing), you should seek legal advice promptly. This is likely a violation of the discharge order of the bankruptcy court. There may also be a Fair Credit Reporting Act violation.  Your lawyer may suggest a lawsuit against the original creditor, the debt collector (if applicable) and/or the credit reporting agency. . Only a lawyer experienced in these kinds of cases can properly evaluate the situation and provide advice about your options.
  7. Just to make sure your credit is being reported correctly you may want to order your reports again in a year or whenever you are again eligible for a free report from www.annualcredi treport.com. Repeat the process above as needed.

Summary:

  1. Order your credit reports 60-80 days after your Order of Discharge
  2. Order additional reports for problem with checking account or overdrafts
  3. Carefully review  your credit reports
  4. Dispute any balances that are no longer owed with both the original creditor and the credit reporting agency.
  5. Review  responses promptly
  6. If the response says you still owe the debt, seek legal advice from an experienced attorney.
  7. Repeat in a year

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  


I also provide HAMP, HAMP2 and other Mortgage Modification Services.

©Christopher C. Carr, Attorney at Law 2009, 2013, All Rights Reserved

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