Friends of Bankruptcy Bill(FOBB) are experienced consumer bankruptcy lawyers willing to share their thoughts and answer bankruptcy questions on this site. Feel free to get in touch if interested in contributing as a FOBB.
Before I get to the heart of the story, allow me to give you a quick refresher about the Means Test and what it means for a bankruptcy petitioner.
To grossly over-simplify the Means Test, it is basically Congress’ attempt to create a mathematical formula to objectively determine how much money, if any, a debtor can afford to pay to creditors holding unsecured claims. It (Form B22) determines whether you qualify for a Chapter 7, in which all of your unsecured creditors are discharged. And if you don’t qualify for Chapter 7, the same form determines how much income is available to those creditors.
A number of statutory deficiencies exist which have given rise to disputes and some bizarre interpretations to several aspects of the Means Test, often resulting in gross inequities. One example is whether a Chapter 13 debtor can take deductions on the Means Test for payments on a secured debt which the debtor intends to surrender because the payments are contractually due at the time of filing. In re: Dionne, in the Eastern District of Wisconsin says they can. I feel awkward writing about that decision because for one thing – this decision is favorable to debtors, and I am a debtors’ counsel. Also, I have nothing but respect for the judge who rendered the decision.
But I respectfully disagree that a debtor should be allowed to deduct payments on a loan that the debtor knows full well they will not pay again in the future. Fortunately for me, Read the rest of this entry »
Friends of Bankruptcy Bill(FOBB) are experienced consumer bankruptcy lawyers willing to share their thoughts and answer bankruptcy questions on this site. Feel free to get in touch if interested in contributing as a FOBB.
Russell A. DeMott, Esq. is a Charleston, SC-based bankruptcy attorney with over 14 years of experience representing debtors in wide range of bankruptcy matters. Originally from Michigan, he is licensed to practice in both South Carolina and Michigan. To learn more about Russ, you can visit his website (www.scbankruptcyattorney.com) or his blog (www.scbankruptcyattorney.com/blog) and also find him on Facebook and Twitter.
Russell A. DeMott, Esq.
When evaluating your financial situation, don’t let your emotions get in the way. Chapter 7 or Chapter 13 bankruptcy may be the right solution, especially if you have assets with no equity.
I recently met a very distressed client. He had three houses that he had been trying to keep for over two years. Two of the properties were worth over $400,000 each. One was worth about $200,000. However, on each of the properties, the mortgage balances far exceeded the value. The client had over a million dollars in property, but he owed far more than that.
As we discussed his financial goals and ability to pay his debts, I explained to him that the calculator on my desk was worth more than all three of these properties combined. He looked puzzled. After I explained that the calculator was worth something–at least a dollar–and that I owned it free and clear of any liens, I could see that he finally understood. He also understood that the house payments he’d been paying were nothing more than rent. It would be years and years before he even got to the break even point with the properties.
Photo by Michael Mulligan
He had been struggling for years to keep the properties. He’d tried the HAMP (“Home Affordable Modification Program”), he’d tried negotiating, and he’d written letters. All this was to no avail. He was emotionally exhausted. My recommendation was that he file a Chapter 7 bankruptcy and surrender the properties.
He left relieved. He looked like a weight had been lifted from his shoulders. He understood that he couldn’t go on like this and was glad he took time to learn that the bankruptcy laws could give him a fresh start.
Keep in mind that the value of your property is in the equity (fair market value less what you owe on it in mortgages and other liens). If you have no equity and you can’t afford the monthly payments, you need to take a hard look at just why you are trying to keep these properties. Think with your head and not your heart. And keep focused on what’s really important in life.
Friends of Bankruptcy Bill (FOBB) are experienced consumer bankruptcy lawyers willing to share their thoughts and answer bankruptcy questions on this site. Feel free to get in touch if interested in contributing as a FOBB.
Bill McLeod is a Boston-based bankruptcy attorney, representing creditors and debtors with over 15 years of experience. You can learn more about this and read more of his blog posts at www.mcleodlawoffices.com. Follow him on Twitter. Find him on Facebook.
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Bill McLeod, Esq.
What leads a person to the steps of the bankruptcy court seeking relief from debt? That is not an easy question to answer – although there are some out there who may think they know the answer. But as I was digesting a recent opinion out of the Bankruptcy Court in the Northern District of Texas, I read the following:
Anecdotally, this court notes that it sees all sorts of consumer debtors come through the bankruptcy system. At one end of the spectrum, there are individuals who have been plagued with many bad circumstances that have led to their financial demise-such as health problems, injuries, medical bills, job loss or instability, divorce, or death of a bread winner. At the other end of the spectrum, there are individuals who have been blessed with good health and adequate jobs and resources, and yet have somehow created a mountain of consumer debt that they (and probably their creditors) should have known could never be repaid. Some of these latter individuals have even engaged in some sort of fraud along the way-perhaps in a loan application at some point, or with intentional avoidance and nonpayment of taxes, or by hiding assets before entering into bankruptcy.
But the vast majority of debtors this court sees fall somewhere between the two extremes. They are individuals who probably cannot honestly blame “bad luck” as the cause of all of their woes. And many of them have made more poor choices than wise ones, and such choices have finally caught up with them.
So what does this mean, and why am I sharing it with you? The easiest answer is that it is my experience that the court is right. However, there’s a rather significant “but…” Read the rest of this entry »
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Special thanks to Gregory A. Holbus, Esq.of Green Bay, WI for sharing both his bankruptcy expertise and sense of humor with us for this cartoon. For more of Greg’s bankruptcy expertise, go to Wisconsin Bankruptcy Blog.
Meanwhile, here’s a blog post on the intersection of Halloween and bankruptcy by George Haines of Haines & Krieger (Las Vegas, NV):
Still searching for a Halloween costume? Go as a lawyer. Or better yet, go as J.R. Ewing’s laywer. Here’s an Attorney Directory along with info on Dallas Bankruptcy to give you more ideas.
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Sure, Mortgantua doesn’t have the most engaging personality. And you wouldn’t want to invite him over to your house, per se. But he does make a great Facebook friend. Click below to be his friend and we promise that he’ll leave you and your home alone. Well, probably.
Be the first in your district to get these official BAPCPA Man and Mortgantua items! Give them as gifts to friends and clients! Wear them proudly at conferences!
Note #1: Don’t see what you want? Zazzle lets you choose from a variety of shirts, mugs, buttons and other items. Still don’t see what you want? Email us at bill [at] bankruptcybill [dot] us.
Note #2: Apologies for the prices being a little on the high side. Doing this through Zazzle is convenient on our end since we don’t have to handle any inventory. But they don’t make it cheap.
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For more information on Chapter 7 and Chapter 13 bankruptcy, here are some blog posts from bankruptcy lawyers:
The October issue of the American Bankruptcy Institute Journal has an entertaining and humorous tribute to Reader’s Digest, in honor of its recent bankruptcy filing, written by Dallas attorney Eric Van Horn who regularly writes for the ABI Journal’s ”Chapter 8″ humor column.
The tribute provides Reader’s Digest-style synopses of events leading up to recent media and celebrity bankruptcies, along with a clever take on the leveraged buyout. If you are an ABI member, it is the Sideshow article that is part of the Chapter 8 humor column; otherwise look for it on Westlaw or Lexis (although we encourage all bankruptcy professionals to join the ABI).
Fantasy bankruptcy is brilliant. Harvey Miller is the Adrian Peterson of the draft, but then do you go for the double-down strategy of picking Goldstein, or do you diversify and go with someone from K&E?
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Also, if you’re really into stats, go here for more information on the Bankruptcy Means Test, and for the Dallas Cowboy fans out there, here’s more info on Dallas Bankruptcy (Redskins fans need not click).
And lastly, here are some recent bankruptcy-relevant posts on Above The Law:
Also, in case you missed them, you can see the Bankruptcy Bill cartoons about Facebook here (#1) and here (#2). And everyone is always welcome to join the large and growing Bankruptcy Bill Facebook Group.
Apologies for any inconvenience to our rss subscribers. The reason for the change? The ABA Journal kindly emailed to let us know that Bankruptcy Bill is now in their Blawg Directory–have a look at http://www.abajournal.com/blawgs/bankruptcybill.us. However, they also pointed out that they were having trouble with the old rss feed of http://bankruptcybill.us/feed. Hence the switch.
Not clear if this means we’re going to be in the ABA Journal’s Top 100 Blawgs, but regardless, we appreciate being on their radar screen. And if you haven’t done it already, take a moment to tell the ABA Journal why Bankruptcy Bill should be included in their Top 100 Blawgs: http://www.abajournal.com/blawgs/blawg100_submit (Deadline Friday, Oct 2).
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See below to get a sense of what lawyers in the blogosphere are saying on topics related to BAPCPA. And here’s some general information about Los Angeles bankruptcy and Atlanta bankruptcy.
I’m glad to be a member and look forward to learning the secret handshake if one exists. If it does, it would be great if someone out there could email me the protocol. Or perhaps send me a YouTube video so I can observe and practice? (I promise not to have it illustrated in a cartoon.)
Secret handshake or not, I look forward to meeting and connecting with fellow NACBA members.
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Below are some useful posts from bankruptcy lawyer blogs on the topics of mortgages, foreclosure, loan modification and the Making Homes Affordable Program. (Go to the BK Lawyer Blogs page on this site to see a full state-by-state list of bankruptcy lawyer blogs. And get in touch if you have a blog and don’t see it listed.)
Here’s an interesting post by Jayne Navarre, managing director of lawgravity.com, (re-posted with permission). Jayne consults on Internet marketing and communications for law firms. She coaches lawyers and marketers on the nuances necessary to succeed in social media, social networking and search optimization on the Web. She blogs at www.virtualmarketingofficer.com and can be reached at jln@lawgravity.com.
I just dropped an idea bomb over on the Legal Marketing Association’s peer-to-peer social network, LMA Connect; it’s a members only community so I can’t post the link. However, it’s so big –at least in my mind– that I thought I’d share it with my blog readers with a caveat “you heard it here, first.”
I think law firm web sites should host banner and skyscraper ads for their clients. For free, of course.
There’s a thoughtful and entertaining article in the September 2009 Issue of the ABI Journal titled “Restructuring the Misperception of Lawyers: Another Task for Bankruptcy Professionals” written by Nancy Rapoport (Gordon Silver Professor of Law at UNLV’s William S. Boyd Law School and the author of the book Enron: Corporate Fiascosand Their Implications), and by bankruptcy lawyer and humorist Eric Van Horn.
However, it turns out that while we received permission from the authors to re-post the article here, we do not in fact have permission from the ABI to re-post the article. So, after further consultation with our own in-house intellectual property counsel, IP Aileen, we have decided that the prudent course of action would be to remove the article from this site.
If you’d still like to read the article (and it is a good one), please fee free to e-mail Eric Van Horn at chapter8humor [at] gmail [dot] com and he’ll be happy to e-mail you a copy. (It’s either that or shell out $300 for ABI membership to get your own copy of the ABI Journal.)
Considering the negative stigma around bankruptcy law and in light of our nation’s economic woes, these cartoons are a refreshing departure. They’re easy to read and understand. They take the law and break it down into layman’s terms; a gift I rather admire.
We’re also pleased that Christine was moved to compose her own bankruptcy haiku. Always good to see bankruptcy lawyers releasing their inner poets.
2. An appreciative mention of our recent fantasy football/structured finance commentary by NYU Professor of Political Science Josh Tucker on The Monkey Cage, a blog written by a group of political science professors. (Full disclosure: Josh is not only my cousin but also manager of Cluck U which competes against the BAPCPA Men in the Dzhankoye fantasy football league.)
What do General Mills and the mortgage industry have in common?
The both like to take crap, re-package it and label it as something healthy.
Today on my way to work outside of Grand Central Station I was handed a sample General Mills “Fiber One” oats & chocolate bar with a wrapper indicating “35% Daily Value of Fiber.” When I opened up the package, though, it was your basic chewy granola bar full of chocolate chips, high maltose corn syrup, high fructose corn syrup, etc. All in a nice shiny package. Kids junk food repackaged for adults.
It occurred to me that’s the same approach that the mortgage and banking industry took to finance. Take a bunch of subprime loans, package them together, get the ratings agencies to label them as something healthy-sounding like “AAA,” and then sell them off to the public.
It also occurred to me that, despite all the hand-wringing over that process with the benefit of 20/20 hindsight, we still continue to allow the same pattern to continue in various aspects in our lives (and probably still in the finance industry for that matter).
Perhaps a more appropriate General Mills analogy would be how they treat oat bran in general. Some studies apparently show some sort of correlation between oat bran and lower cholesterol. I think the study may have even be discredited by now, or maybe just qualified in a variety of ways. Whatever it is, General Mills has aggressively applied the transitive property to sugar-filled cereals like Honey Nut Cheerios (and regular Cheerios, for that matter, which has a lot of sugar in it) to claim that eating them is a good way to help lower your cholesterol.
The reality of course is that eating those cereals is no more likely to lower your cholesterol than it is to make a pool of subprime mortgages a safe bet. And getting Moody’s to give a “AAA” rating to Froot Loops isn’t going to change the fact that they’re no more than rings of sugar (or high fructose corn syrup) held together by chemicals. It also doesn’t make them “whole grain” despite the fact that the FDA seems ok with that label.
Why are we so upset about abuse of a process that ruined our economy, but we’re willing to accept it in other settings? Are there just too many parties that benefit from the system to upset the Apple Jacks cart? Or is there something deeper within our human nature where we want the wool to remain snugly pulled over our eyes at the expense of our society?
Paraphrasing the great modern philosopher Homer Simpson, I would simply say, “Mmmmm…..high fructose corn syrup.”
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For a more in depth explanation of the automatic stay, have a look at the Wikipedia entry. Also see posts on the topics of automatic stay and debt collection by the following bankruptcy lawyers on their blogs:
Have a blog post you think should be included? Or a suggestion for a future BLT theme? Send an e-mail to bill [at] bankruptcybill [dot] us.
Suggestion to bankruptcy lawyers with blogs: Make sure to include a “Search” function somewhere on your blog. It makes it easier to find topical posts on your blog and increases the likelihood that a post from your blog will be included in BLT.
Credit cards. The virtual foundation of our economy. The evil siren that drags so many people into bankruptcy and financial ruin. And yet ironically a tool for improving credit scores if used in somewhat counter-intuitive ways. What do bankruptcy lawyers have to say about them on their blogs? See below.
[Warning: This is a post with actual writing that has no new cartoons and only tangentially relates to bankruptcy.]
Has anyone else noticed the uncanny parallels between fantasy football and structured finance?
Both seem to involve disconnecting the value from the source of the value. In the case of structured finance, it’s separating the payments from payment-generating assets such as loans for homes. This process created a bubble by disconnecting the incentive to make loans from the actual value of the loans.
In the case of fantasy football it seems a similar process is occurring. We take all the numbers and statistics generated by teams of actual players who practice and work together on a daily basis and form relationships, and we structurally isolate them from true value of the games. Then we rearrange and redistribute the numbers and re-value them in a way that creates a variety of perverse incentives that are often disconnected from the value of the games themselves.
Where’s the bubble in all of this? NFL Football is more popular than ever, and a large part of that is due to interest in fantasy football. Now instead of just following the Redskins and maybe keeping an eye on the Cowboys, you might also flip back and forth to the Lions-Raiders game to see whether Darren McFadden or Justin Fargas is getting the bulk of the carries. (Seriously.)
On top of that, services like DirectTV are flourishing thanks to the “need” of football fans to not miss a game. And fantasy football league hosters, news providers and bloggers are gainfully employed for using skills that previously had no value outside of a sports bar. All because we’ve developed a more creative way to use these statistics that were sitting around not being used by anyone.
What’s the danger of this bubble? As a fantasy football participant myself (Team name: “BAPCPA Men”), I’m not sure but I can’t help feeling rather cynical. The bubble created by the structured finance machine left a lot of destruction and bankruptcy in its wake, and somehow most of our country didn’t see that coming. So I propose we start worrying about the Fantasy Football Bubble now. Maybe set up a think tank or ABI commission to start really thinking these issues through.
Or perhaps we can figure it out right here if anyone wants to post some additional thoughts or comments.
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Below are some helpful posts from bankruptcy lawyer blogs on the topics of mortgages, foreclosure, loan modification and the Making Homes Affordable Program. Go to the BK Lawyer Blogs page on this site to see a full state-by-state list of bankruptcy lawyer blogs. (And get in touch if you have a blog and don’t see it listed.)
Update 9.10.09: There’s a great piece on NPR about foreclosures and the black-box decision making process regarding loan modifications (”Major Banks Still Grappling with Foreclosure“). At one point, there’s a clip of reporter Chris Arnold in the Bank of America call center, listening over the shoulder of a call center rep who tells a homeowner they’re not eligible for a loan modification. Arnold questions the rep and receives a not so satisfying explanation. The issue is raised with the supervisors and it turns out the homeowner was in fact eligible for a loan modification. How frequently is this scenario replaying itself?
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*Correction: The cartoon previously referred incorrectly to a “Chapter 7 repayment plan.” Apologies for the confusion.
Below are some helpful posts from bankruptcy lawyer blogs on the topics of unemployment, median income and the means test. Go to the BK Lawyer Blogs page on this site to see a full state-by-state list of bankruptcy lawyer blogs. (And get in touch if you have a blog and don’t see it listed.)
Have a blog post you think should be included? Or a suggestion for a future BLT theme? Send an e-mail to bill [at] bankruptcybill [dot] us.
Suggestion to bankruptcy lawyers with blogs: Make sure to include a “Search” function somewhere on your blog. It makes it easier to find topical posts on your blog and increases the likelihood that a post from your blog will be included in BLT.
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p.s. Regarding copyright issues, our legal counsel, IP Aileen, says: “Other bloggers/websites/publications: You are more than welcome to post “Bankruptcy Wave” on your sites as long as you also include all of the text, links and images in this post, including this paragraph. If you fail to respect our wishes, we’ll fix the economy so as to remove the need for any bankruptcy services (if you’re a lawyer) or any more coverage of the recession (if you’re a journalist/blogger).”
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p.s. Regarding copyright issues, our legal counsel, IP Aileen, says: “Other bloggers/websites/publications: You are more than welcome to post Strip #19 – Law Firm Raids on your sites as long as you also include all of the text, links and images in this post, including this paragraph. If you fail to respect our wishes, we’ll send you back to Kirkland’s restructuring group (Chicago office).”
Systemic Indifference (S. Todd Brown comments on reckless and indifferent collection practices of mortgage companies cited in a Huffington Post piece by Karen Weise. Ties commentary into accuracy of claims process in bankruptcy cases, particularly asbestos cases.)
$40 Million Benchslap for Weil Gotshal (relates to IP and litigation, but anything about Weil Gotshal is bankruptcy relevant from Bankruptcy Bill’s perspective)
BAPCPA Man #3 – Enter Subprimulus resulted in increased media exposure, as indicated below. BAPCPA Man’s secret identity, meanwhile, remains a mystery….
*It bears mentioning that the #1 article (”Three more banks fail, bringing total to 72, The Deal, August 10, 2009″) is, in fact, dated August 10, meaning that BAPCPA Man should have been the #1 article and making this a fairly clear violation of the absolute priority rule. (Well, our version of it anyway.) Further research on the issue is warranted and may result in a “preference” action.
For this book, Karen Ho, a professor of anthropology at the University of Minnesota, actually spent three years working for a Wall Street bank as part of her on-site research, and the investment bankers are referred to as “natives” (in the anthropological parlance). One of the interesting notions she presents is that the process of using corporate layoffs to improve the share price and bottom line is more correctly viewed as Wall Street exporting its own internal culture–one of insecurity and adaptability–to the rest of corporate America.
We understand completely: You want something to read at the beach, but darnit, there’s just not enough good bankruptcy literature out there. (Well, with the exception of bankruptcy haiku. But those are just so…y’know…short.) We hear your cries, and that is why we offer….
On the heels of today’s article in the New York Times (”Online Scammers Prey on Jobless“), it seemed appropriate to see what various bankruptcy lawyer blogs have to say on the topic of scams in world of bankruptcy, debt, mortgages and foreclosure.
Did we miss a good recent bankruptcy-related post on another blog? Post in the comments section below, or e-mail bill [at] bankruptcybill [dot] us to let us know.
Kim Zinke (2nd Judicial District: Kings County)- Brooklyn Bar Association Volunteer Lawyers Project
Thomas Miller (6th Judicial District: Broome, Chemung, Chenango, Cortland, Delaware, Madison, Otsego, Schuyler, Tioga, Tompkins counties) – Law Office of Thomas Miller, Binghamton
Barbara R. Ridall (8th Judicial District: Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Niagara, Orleans, Wyoming counties) – Bulan Chiari Horwtiz & Ilecki, LLP, Buffalo
Simon Haysom (9th Judicial District: Dutchess, Orange, Putnam, Rockland, Westchester counties) – Simon Haysom LLC, Goshen
Weil, Gotshal & Manges LLP was recognized by the American Bar Association on August 3, 2009, for developing an innovative pro bono policy which requested that every lawyer in the firm perform 50 hours of pro bono work, every partner and counsel take or supervise at least one pro bono matter, and every new lawyer work on at least one pro bono matter.
If you know of someone else who deserves a mention for their pro bono bankruptcy work, feel free to post a comment about them.
p.s. Regarding copyright issues, our legal counsel, IP Aileen, says: “Other bloggers/websites/publications: You are more than welcome to post Strip #18 – Pro Bono on your sites as long as you also include all of the text, links and images in this post, including this paragraph. If you fail to respect our wishes, we’ll make you work for Weil Gotshal on an entirely pro bono basis.”
Bargain Babe is who Bankruptcy Bill would love to date if he could ever get out of the office. (See Bill’s previous efforts at dating.)
Bargain Babe (www.bargainbabe.com) is also known as Julia Scott, “a cheapskate by nature and a journalist by training.” And her site has become one of the go-to spots on the web for ways to save money.
Before we publish the next BAPCPA Man cartoon strip, we thought those of you with children, godchildren, nephews, nieces, and/or paleontologists in your life might like to know about Dino Pets, the wonderfully illustrated children’s book written by Lynn Plourde and illustrated by Bankruptcy Bill’s very own Gideon Kendall.
Apologies to everyone whose blog was previously included here. We're having some technical problems with a bunch of the rss feeds (tricky little things) and the feeds weren't working for a number of blogs. Hence the removal of them from the sidebar for the time being. We're working on getting them up and running again.
Here are bios for the highly respected Delaware bankruptcy lawyer 
The October issue of the 
Update 9.17.09
What’s the danger of this bubble? As a fantasy football participant myself (Team name: “BAPCPA Men”), I’m not sure but I can’t help feeling rather cynical. The bubble created by the structured finance machine left a lot of destruction and bankruptcy in its wake, and somehow most of our country didn’t see that coming. So I propose we start worrying about the Fantasy Football Bubble now. Maybe set up a think tank or ABI commission to start really thinking these issues through.
