Recent Entries

Another Jurisdiction Allows Lien Stripping After Chapter 7 Discharge

Published on March 16, 2012 in Bankruptcy Filings and Real Estate. 0 Comments

The United States District Court for the Eastern District of California In Re Frazier has turned the tides on the split decisions in the Eastern District of California pertaining to the ability of a Debtor to strip second mortgages that have no value in a Chapter 13 proceeding after the Debtor has obtained a discharge in a Chapter 7 proceeding.  The District Court’s holding becomes another case in the Country where there is split authority whether the Debtor has the ability to strip a lien under these circumstances.  The Courts rational is that the ability to strip the lien is not based upon the Debtor’s lack of ability to obtain a discharge in the Chapter 13 due to the prior Chapter 7 discharge, but rather, is based upon the Debtor’s completion of all the requirements in a Chapter 13 case. 

As authority continues to be split around the Country, the chances of this case being brought to the Supreme Court seem very plausible.  In addition, we believe that we will see an increase in the Chapter 13 filings in the Eastern District of California after the Debtor has already obtained a discharge in a Chapter 7 case.  Chapter 20’s will once again be a proactive measure by Debtors in those Bankruptcy Courts. 

When faced with a situation where the Debtor is attempting to strip a lien in a Chapter 13 proceeding where the underlying obligation was previously discharged in a Chapter 7, it is crucial that the following steps be taken.  Confirm the value on the property by obtaining an appraisal.  Verify the outstanding balance on any mortgages ahead of the mortgage to be stripped to ensure that the amounts set forth by the Debtor are truly the amounts owed.  Finding $1.00 of equity will allow your mortgage to survive and be paid in full.  In addition, it may be time to determine whether the Chapter 13 proceeding was filed in good faith or solely for the purpose of stripping the second mortgage.  The status of the first mortgage on the property will play a large role. 

Weltman Weinberg and Reis Co., L.P.A. will continue to the monitor the case log throughout the Country as it pertains to the ability to strip a lien after the Debtor has obtained a Chapter 7 discharge.  Unfortunately, Chapter 20 proceedings may be alive and kicking once again. 

If you have any questions on this matter, please contact Alan C. Hochheiser, Managing Partner of the Bankruptcy Group at Weltman, Weinberg & Reis Co., LPA. Al can be reached at 216.739.5649 and .

Bankruptcy Court Costs Increasing

Published on October 20, 2011 in Bankruptcy Court. 0 Comments

On November 1, 2011 Bankruptcy Court Costs will be increasing.  The Judicial Conference has approved changes to the miscellaneous fee schedule for the Bankruptcy Courts.  Motions for Relief from Stay will now carry a court cost of $176.00, which is up from $150.00.  Complaints to Determine Dischargeability and other Adversary Proceedings will now carry a court cost of $293.00, which is up from $250.00.  These fees become effective November 1st for any pleadings filed in any case.  It does not just apply to cases filed after November 1st. 

Weltman, Weinberg & Reis Co., LPA. will keep you advised as to any other changes from the Bankruptcy Courts.

If you have any questions on this matter, please contact Alan C. Hochheiser, Managing Partner of the Bankruptcy Group at Weltman, Weinberg & Reis Co., LPA. Al can be reached at 216.739.5649 and .

Bankruptcy Update: Recent Trends, New Rules and Revised Forms

Published on October 4, 2011 in Bankruptcy Filings, Federal Rules of Bankruptcy Procedure, Local Procedures & Rules and Proof of Claim. 0 Comments

NBKRC: Bankruptcies Down Thru Third Quarter 2011

According to statistics from the National Bankruptcy Research Center (NBKRC), bankruptcy filings have declined through the first three quarters of 2011.  Total consumer bankruptcy filings totaled 144,722, which was down approximately 10% from the first three quarters of 2010.  In addition, bankruptcy filings in September 2011 declined substantially, down 17% over the same period of last year.  Bankruptcy filings for September 2011 totaled 108,517.  Although filings continue to decline, the NBKRC still projects an estimated 1.35 million bankruptcies for 2011.  Many factors have contributed to the 2011 decline in bankruptcy filings, including the lack of available credit to consumers, foreclosure moratoriums and reduced spending by debtors. 

New Bankruptcy Rules and Forms effective December 1st: Is your organization ready?

On December 1, 2011, certain bankruptcy rule changes and new forms will become effective.  These changes primarily deal with the filing of a Proof of Claim and relate to mortgage creditors as well as debt buyers.  However, the change in the Proof of Claim form will affect all entities who file Proof of Claims in bankruptcy proceedings. 

The major change to the form involves attachments that are required to lay out certain fees and costs, and a breakdown of arrearages on the mortgage claims.  It also requires that mortgage creditors provide an escrow statement as of the date of the bankruptcy filing.  The new form provides for payment change notifications to be filed with the Court and the specific form that needs to be used. 

The new rule also changes the procedures that are necessary when a Trustee finishes paying a mortgage through a Chapter 13 Plan.  Weltman, Weinberg & Reis Co., L.P.A. (WWR) will be providing extensive information and training sessions for clients through webinars over the next two months to ensure that you are ready for the changes. 

In addition to the changes to the procedures and forms pertaining to Proof of Claims, there has also been a change in the Reaffirmation Agreement form.  The B240 form has been altered by a technical amendment to clarify some of the language on the form.  This does not affect the procedure and the information needed within the reaffirmation agreement itself.  The additional language is as follows and can be found in the form on the United States Courts website: 

“Even if you do not reaffirm and your personal liability on the debt is discharge because of the lien your Creditor may still have the right to take the property securing the lien if you do not pay the debt or default on it.  If the lien is on an item of personal property that is exempt under your State’s Law or that the Trustee has abandoned, you may redeem the item rather than reaffirm the debt.  To redeem, you must make a single payment to the Creditor equal to the amount of the allowed secured claim, as agreed by the parties or determined by the Court.”

The changes in this language indicate that the redemption, pursuant to 11 U.S.C. § 722, must be made by a single payment.  It also changes the language to say that “the amount of the allowed secured claim which is different from the current value of the property”.  This now becomes consistent with the language contained in § 722 of the Bankruptcy Code.  Although this change does not affect the information that must be included in the Reaffirmation Agreement as to balances, interest rates, monthly payments and arrearages, it is important when preparing a Reaffirmation Agreement after December 1, 2011, that the correct B240A-B alt form is used. 

WWR will continue to keep you advised as to breaking news and trends in bankruptcy proceedings.  Should you require further information please do not hesitate to contact Alan C. Hochheiser, Managing Partner of the Bankruptcy Group. Al can be reached at 216.739.5069 and .

HAMP Single Point of Contact for Borrower Assistance

Published on May 20, 2011 in Homeowners Affordable Modification Program. 0 Comments

On May 18, 2011, The Treasury Department issued Supplemental Directive 11-04 under the Home Affordable Modification Program (HAMP).  The purpose of this Directive is to require servicers of non-GSE mortgages to have a single point of contact for dealing with customers who are currently in or may be eligible for HAMP programs on first mortgages.  Second Mortgages are not covered under this Directive. 

The single point of contact (SPC) must be in a position to communicate with the borrower about a resolution for their delinquency.  The SPC must be in place for the entire delinquency or the imminent default resolution process including any home retention or non-foreclosure liquidation options, and if the loan is subsequently referred to foreclosure, the relationship manager must be available to respond to the borrower’s inquiries regarding the status of the foreclosure.  In addition to HAMP, this will be required with the Home Affordable Unemployment Program (UP) and the Home Affordable Foreclosure Alternatives (HAFA) program.  The effective date of this Supplemental Directive is September 1, 2011.

Please be advised that for those borrowers who are in the process of being evaluated for HAMP, UP or HAFA, who are in a trial period plan or a UP forbearance plan, or who have executed a short sale or deed in lieu agreement by the effective date, the Supplemental Directive must be signed by the relationship manager by no later than November 1, 2011.  In addition, borrowers who were originally ineligible for any of the aforementioned programs prior to September 1, 2011 and re-request an evaluation after that time, must be assigned a relationship manager if the servicer determines there has been a significant change in the borrower’s circumstances that merits the re-evaluation. 

Under this Supplemental Directive, the relationship manager must provide the borrower, in writing within five (5) business days of being assigned to the borrower, a notice which includes a toll free number and at lease one other means of contact for the relationship manager.  The notice must also provide the preferred means for the transmission of any required documentation from the borrower to the servicer.  Please note, that if circumstances arise where the relationship manager should change, written notice of said change and contact information must be communicated to the borrowers. 

Additional information in regard to Supplemental Directive 11-04 may be obtained through the US Treasury’s website at treasury.gov.

Weltman, Weinberg & Reis Co., LPA will keep you advised on issues pertaining to HAMP and other bankruptcy matters.

If you have any questions, please contact Alan C. Hochheiser, Esq. Alan is the Managing Partner of the Bankruptcy Practice Group of Weltman, Weinberg & Reis Co., LPA located in the Brooklyn Heights, Ohio office. He can be reached at 216.739.5649 or .

Mortgage Modifications Drop in February

Published on April 11, 2011 in Bankruptcy Filings. 0 Comments

A recent report indicated that the number of Mortgage Modifications dropped in February by 14% from the number completed in January. The number of modifications, whether under HAMP or through the Lenders themselves, dropped below 100,000 a month for the first time in 18 months. The question that remains is whether the reduction in February is just a blip on the radar or whether it will become a trend. This is in light of a decrease in the number of Foreclosure cases filed nationally by 24,000 in February from January 2011. The amount of delinquent mortgage loans also dropped in February as compared to the prior month.

As previous blog articles have noted, The Senate Judiciary Committee has cleared the way for the Senate to take up SB 222 which will allow Bankruptcy Judges to set up mandatory loan modification programs in Bankruptcy Cases. If the bill can obtain passage in both chambers of Congress, which is unlikely, we may see even more loan modifications in the future.  If there continues to be a reduction in the number of modifications, will SB 222 gain some more steam? Time will tell.

Weltman, Weinberg & Reis will continue to keep you advised as to activities concerning the Mortgage Industry in Bankruptcy cases.

If you have any questions on this matter, please contact Alan C. Hochheiser, Esq. Alan is the Managing Partner of the Bankruptcy Practice Group of Weltman, Weinberg & Reis, LPA located in Brooklyn Heights. He can be reached at 216.739.5649 or .