Recent Entries

Eligibility For Relief in Chapter 13: Pre-Filing Credit Counseling May Be Waived

Published on February 20, 2009 in Chapter 13, Chapter 7 and Real Estate. 0 Comments

Section 109 of title 11, United States Code, is amended–

(2) by adding at the end of subsection (h) the following:

`(5) The requirements of paragraph (1) shall not apply in a case under chapter 13 with respect to a debtor who submits to the court a certification that the debtor has received notice that the holder of a claim secured by the debtor’s principal residence may commence a foreclosure on the debtor’s principal residence.’.

One of the hallmarks of the 2005 BAPCPA amendments is that all potential Chapter 7 and Chapter 13 debtors are required to receive credit counseling before they file for bankruptcy. Failure to do so results in an automatic dismissal of the case if they received a notice a lender may foreclose on their home.

However, with this amendment, debtors who receive a notice of foreclosure do not have to take the pre-bankruptcy credit counseling.

Issues

  • What is a “notice” that a home may be foreclosed upon?  There is no requirement in the statute that the notice be in writing.  Is a phone call a notice? The certification required by the court may be as simple as a debtor’s affidavit that a lender might commence foreclosure.
  • It is anticipated that the courts will be liberal in the interpretation of a “notice.”
  • What about states that have non-judicial foreclosures? – the letter of default may be the commencement of foreclosure.
  • The effect of this is to remove the cost of the counseling from the cost of filing bankruptcy, and eliminate a step, thereby hastening the filing of a bankruptcy case.

Overview Of The Helping Families Save Their Homes in Bankruptcy Act of 2009.

Published on February 16, 2009 in Bankruptcy Act 2009. 0 Comments

Earlier this year, both houses of the U.S. Congress proposed amendments to the Bankruptcy Code, which, if enacted, will drastically alter the way in which home mortgages are dealt with in Chapter 13 bankruptcy proceedings.

The Bills, cited as HR 200 and S.61 and together known as the “Helping Families Save Their Homes in Bankruptcy Act of 2009” include amendments to: (1) ease the eligibility requirements to seek Chapter 13 relief, (2) potentially give borrowers the right to prosecute certain consumer lending violation claims within the bankruptcy case, and (3) to prohibit the type and amount of fees that may be assessed by a lender against a borrower in bankruptcy.  However, the section of both Bills receiving the most publicity to date centers around the borrower’s ability under the new law to cram down the balance owing, alter the interest rate and extend the repayment term.

Specifically, Congress is seeking to add a new section, captioned 11 U.S.C. 1322 (b)(11) which provides that a borrower, who receives a notice from his lender that a foreclosure may be commenced upon his principal residence, may then modify the terms and conditions of the loan to:

  1. Reduce the amount of the secured claim to an amount equal to the current value of the home, with the remaining balance treated as unsecured and discharged upon completion of the plan;
  2. Extend the repayment term for a period of up to 40 years (minus the period for which the loan has been outstanding); and
  3. Adjust the interest rate upon the Note to a fixed annual rate commensurate with the published Federal Reserve rate for conventional mortgages, plus a reasonable premium added for risk; or
  4. In the case of an adjustable rate mortgage, a borrower also has the option of prohibiting, reducing or delaying a rate adjustment during the life of the Chapter 13 plan.

In the coming weeks and months, the Bankruptcy staff at Weltman, Weinberg and Reis will provide you with a more detailed analysis of the specific provisions of the Bills to help you better understand how this potential new law may affect your business and how you can prepare to deal with its implementation.

Thriving In Challenging Times.

Published on February 11, 2009 in Bankruptcy Act 2009. 0 Comments

The bankruptcy team at WWR is committed to helping you thrive in these ever changing times.  With the potential for new bankruptcy legislation, we think now more than ever our continued partnership with clients and others is vital.

Our team is introducing a weblog to help facilitate the sharing of information regarding the upcoming bankruptcy legislation.  In addition, we will be highlighting changes we see in the processing of the court procedures as well as different features in the proposed legislation that may directly affect you and your company.   We will be commenting on the possible interpretations the courts may give to the statutes as well as how they could affect your business and what options may exist to deal with them.  We will be ready to update you on any breaking news.

We invite you to partner with WWR in this blog by reading and sharing with us your questions, concerns and observations in each article’s comment section or our Contact page.  WWR feels strongly that we can help you navigate through these challenging times so please join us at wwrbankruptcy.com.