Archive for the 'Bankruptcy Act 2009' Category

Additional Documentation Requirements in Southern Indiana and Southern Ohio

Published
by
Laura Faulkner
on November 27, 2009
in Bankruptcy Act 2009, Chapter 13 and Local Procedures & Rules
. 0 Comments

The Southern District of Indiana and the Southern District of Ohio are revising their Local Rules effective December 1, 2009. Both jurisdictions are revising their Rules to require creditors to attach a post-petition payment history to motions for relief from stay in Chapter 13 cases.

Additionally, the Southern District of Ohio will require additional documentation to be supplied with motions for relief from stay on real estate. Creditors will be required to attach a copy of the recorded deed upon which the debtor acquired the property to the motion for relief from stay.

Please include these additional documents when referring motions for relief form stay to our office in order for us to more quickly process the motion.

Changes to the Federal Rules of Bankruptcy Procedure

Published
by
Laura Faulkner
on November 25, 2009
in Bankruptcy Act 2009
. 0 Comments

Effective December 1, 2009, the Federal Rules of Bankruptcy Procedure will be updated. The most significant change that affects creditors is the change in various time periods. The Rules set forth a number of deadlines for filing pleadings or responses to pleadings. These deadlines are not consistent and oftentimes fall on weekends or holidays. The updated Rules streamline these deadlines to multiples of seven. For example, a 15-day objection period will be shortened to 14 days, while a 20-day objection period will be extended to 21 days.

Similarly, the 10-day stay under Rule 4001 will be extended to 14 days. Under the current rule, an order granting relief from stay is effective 10 days after the date of the order. Starting December 1, 2009, an order granting relief from stay will not be effective until 14 days after the date of the order. Some judges permit a waiver or modification of this rule. Weltman, Weinberg & Reis will continue to seek these waivers and modifications in the jurisdictions that permit it.
 
The Federal Rules of Bankruptcy Procedure are adopted in all courts, so these changes will affect creditors in every jurisdiction in which they file bankruptcy pleadings. Although they create additional burdens for creditors, the underlying goal is to protect debtors’ sensitive financial information and identities.

Change In Bankruptcy Rule Adds Reaffirmation Cover Sheet

Published
by
David Yunghans
on October 23, 2009
in Bankruptcy Act 2009 and Bankruptcy Filings
. 1 Comment

The form used for reaffirmation agreements will change as of December 1, 2009. Creditors filing reaffirmation agreements will be required to include a completed reaffirmation cover sheet with the filing of an agreement.  The cover sheet is a two-page questionnaire filled out by debtors and creditors that discloses financial information necessary for the court to determine whether a reaffirmation agreement creates a presumption of undue hardship for the debtor.  Hardship is presumed if a debtor shows negative monthly income and expenses on Part D of the reaffirmation agreement.  If there is a difference between the income and expenses listed on schedules I & J of the petition and income and expenses listed on part D of the reaffirmation agreement cover sheet, the debtor is required to explain the difference.  The debtor must answer two questions explaining the difference and certify through signature that the information is true and accurate. 

The rule change is national and will affect reaffirmation agreements filed in all states. If the reaffirmation does not contain the cover sheet, the bankruptcy courts may reject it after December 1, 2009.

Statehouse Bill Would Require Lenders To Mediate Before Filing A Foreclosure Action

Published
by
David Yunghans
on October 22, 2009
in Bankruptcy Act 2009 and Real Estate
. 0 Comments

Currently in Ohio before filing a foreclosure action, the lender is not required to participate in a mediation program.  This may soon change as Ohio State Representative Matthew Dolan proposed a bill in the Ohio House, which would make mediation mandatory before filing a foreclosure.  Under House Bill 306, a lender would be required to come to the bargaining table before a foreclosure action is filed.  If the lender refuses to mediate with the property owner, the foreclosure action could be dismissed.  The rule for mandatory mediation would not apply to homes in foreclosure for delinquent property taxes, unoccupied residences, or foreclosure actions where the homeowner does not reply to the summons within 28 days of issuance.  The bill requires that the mediation take place by a court appointed mediator within 60 days of receiving an answer to the foreclosure complaint.  If the filer of the foreclosure action does not attend the mediation hearing, the court may dismiss the foreclosure complaint.

Not Gone and Not Forgotten: Bankruptcy Reform and Cram Down

Published
by
Beth Schenz
on August 26, 2009
in Bankruptcy Act 2009 and Real Estate
. 0 Comments

Last month, House Financial Services Committee Chairman Barney Frank (MA- D) indicated that he would revive the bankruptcy legislation that would allow debtors to cram down first mortgages.  Specifically, if the banks did not increase their efforts to modify existing home loans, Franks stated that he would revisit the bankruptcy cram down legislation. 

Not only is the House threatening bankruptcy cram down legislation but the Senate Committee on the Judiciary, Subcommittee on the Administrative Oversight and Courts is also reviewing recommendations on modifying mortgages in bankruptcy.  

On August 20, 2009, the Senate Committee scheduled a hearing on “Mortgage Modifications during the Foreclosure Crisis: Is there a Role for Bankruptcy Courts?” At the August 20, 2009 hearing, testimony was taken from multiple homeowners on their negative experiences with loan modifications.  Also, Susan Bodington, Deputy Director for Programs, Rhode Island Housing testified that, “[b]ankruptcy reform could provide the incentive or pressure to expedite workouts and collaborate more effectively, but it should be structured in such a way that it does not penalize responsible lenders who made fair loans that were in the best interest of the customers when the loan was made, and who have worked with their customers compassionately to keep them in their homes.”  In his testimony, John Rao, attorney for National Consumer Law Center, strongly urged the need for bankruptcy reform.  Mr. Rao stated, “[a]doption of court-supervised mortgage loan modifications would sidestep many of the structural barriers in the servicing industry that today are preventing mass loan modifications from occurring.”

Before recess on July 23, 2009, the Senate Committee took testimony on “The Worsening Foreclosure Crisis: Is It Time to Reconsider Bankruptcy Reform?” (See previous blog entry).

While such government agencies like the Federal Housing Finance Agency have taken the unofficial position that forcing people into bankruptcy is the wrong solution and loan modification is the solution, loan modifications still remain low.  Currently, the treasury department is reporting that only 9% of eligible borrowers received modifications. 

The continuing rise in foreclosures, the high level of unemployment and the lack luster of loan modifications are creating pressure for Congress to revisit bankruptcy reform.  While once bankruptcy practitioners felt that the bankruptcy reform that would allow debtors to “cram down” their mortgage debt to the value of the real property was defeated in Congress, the case for bankruptcy reform still looms.