Sacramento Bankruptcy Attorneys Blog

Victory for Chapter 7 Debtor in Student Loan Discharge Case

Tue, 06 Mar 2012 16:07:27 -0800

As a Chapter 7 and Chapter 13 bankruptcy attorney in Sacramento I frequently receive calls from people who consider bankruptcy because they have oppressive student loan debt. Student loans are a major issue for many bankruptcy filers. I predict these issues will continue to increase and the laws will ultimately need revision as the problems surmount; students, have been denied the opportunity to discharge their debt even when the amounts are astronomical and the student has little means to make payments.

In what can be considered a victory for individuals with student loans, the Sixth U.S. Circuit Court of Appeals decided in In re Gourlay that Sallie Mae, the student loan organization, could not set a default judgment aside that had been obtained by debtor Kristin Gourlay. Sallie Mae failed to respond to adversary proceeding filed by Gourlay which attempted to find the debt dischargeable. The Sixth Circuit found that the bankruptcy court was within its rights to find that the failure was not excusable neglect, the court said; service was proper and the appropriate person simply failed to respond.

Kristin Gourlay filed for Chapter 7. During the case she filed an adversary proceeding seeking to determine the dischargeability of her student loans owed to Sallie Mae. She owed Sallie Mae approximately $25,500. Her bankruptcy attorney sent Sallie Mae a timely summons by certified mail, and the return card was signed by someone believed to be a part time employee at the company's Virginia headquarters. The deadline for a response came and went without a response from Sallie Mae. Gourlay filed for a default judgment about a week later. The Bankruptcy Court intitially rejected her motion due to improper service. However, Gourlay served the summons again. When there was still no response, the bankruptcy court granted her second motion for default judgment. Eighteen days after the default judgment became final, Sallie Mae moved to set it aside for excusable neglect. The Bankruptcy Court ultimately rejected this, finding that internal breakdowns are not excusable neglect, and Sallie Mae appealed.

On appeal, Sallie Mae argued that its failure to respond was not prejudicial; that Gourlay's complaint was insufficient in any case; that she failed to follow local notice rules; and that service was not proper. The Sixth U.S. Circuit Court of Appeals rejected all of these arguments. On the sufficiency of Gourlay's complaint, the court found that Sallie Mae could no longer present these arguments, having waited past the deadline for appeal of a purported legal error. On the excusable neglect issue, the Sixth Circuit simply disagreed. Sallie Mae said the office that the summons was mailed to was in the process of moving, with only one employee present; it argued that the resulting delays and chaos amount to excusable neglect. However, the court noted that Sallie Mae offered no evidence that the organization took steps to safeguard important mail and the lost notice appeared to be the result of its own negligence. On the notice issue, the court said, Sallie Mae was entitled to no further notice in any case because of its failure to respond. Finally, the Sixth Circuit found that service was not improper just because the executive named did not work at that office; Gourlay had an obligation to serve the principal office, and she did.

I am pleased to see a win in a case involving a company that refused to follow the rules. In general, this kind of default judgment is more often won against individual defendants, who miss notices because they don't have the resources of a large organization like Sallie Mae. (In rare cases -- though less rare in debt collection lawsuits -- the notice is actually served incorrectly.) This ruling helps establish that the same rules apply even when the losing party is powerful and can afford many lawyers. It's also, of course, a win for Gourlay, who may be able to clear the encumbrance of her student loans because of this mistake.

As a Sacramento Bankruptcy Attorney I routinely work with people who are suffering from heavy student loan debts and have limited options for clearing it. Based in downtown Sacramento I represent clients across the entire metropolitan area who are ready to explore bankruptcy as an option for clearing debt and making a fresh start. To speak to us about your case and your options, send us a message through our website or call 1-916-361-6028.

California Attorney General Rejects Another Attempt to Include State in Robo-Signing Settlement

Tue, 31 Jan 2012 09:42:55 -0800

As a practicing bankrtuptcy attorney in Sacramento I have followed the states progress in the "robo-signing" settlement talks with great interest. Attorney General Kamala Harris has recently made headlines by refusing to sign on to the national settlement, calling it inadequate to compensate Californians for the many losses they incurred in the housing crash. The California Attorney General's Office has launched independent investigations, including some in cooperation with Nevada. According to the LA Times in an article written Jan. 25, 2012, titled, California calls $25-billion mortgage settlement 'inadequate,' Harris and her deputies were invited back to the negotiating table by further concessions from lenders, but ultimately rejected all offers because they were insufficient. However, A spokesperson for Harris told the media that the settlement would prevent her and other AGs from pursuing further independent investigations.

Despite nearly 16 months of investigations and on going negotiation, and the original participation of AGs from all 50 states and Washington, D.C., no deal has been reached. The investigation has been plagued by politics, with conservative AG's arguing that the settlement is too aggressive and liberal ones countering that it doesn't go far enough. Particularly, AGs in New York, Delaware, California, Nevada and elsewhere have opted out of the settlement or threatened to and started their own investigations into lending practices. Harris said in late September that the settlement offer at that time did not include enough remedies from the five major lenders for the foreclosure crisis. She and the other breakaway AGs said they'd prefer to see efforts to stop foreclosures and their negative effects, going beyond addressing the fallout from robo-signing itself. A AG's office spokesperson said: "The current deal still is not transparent enough or sufficient to address Californians' needs."

California's participation in the talks is considered important to any settlement due to the size of the state; California has the resources to bring large lawsuits on its own. According to the article, the latest proposal includes a $17 billion program that would reduce principal on loans that are "underwater," or larger than the value of the home. Another $5 billion would be earmarked for people directly harmed by robo-signing and other bad servicing practices, and $3 billion would help underwater homeowners refinance at a rate of 5.25%. (Current rates for a 30-year prime mortgage are 4 to 4.5%.) In return, the AGs would agree to release lenders from actions for improper servicing or origination of mortgages -- a provision that Harris and some colleagues believe would stop their existing investigations. Delaware has filed a lawsuit alleging MERS has engaged in deceptive practices; Massachusetts has sued five lenders, alleging they knowingly pursued illegal foreclosures.

As a Sacramento Bankruptcy Attorney I am pleased to see our state continue the fight and pursue a settlement that could provide meaningful help to people who were hurt in the housing crisis. That includes people who were directly harmed by robo-signing or other illegal and unethical behavior by lenders, as well as people who are suffering because housing prices have dropped through no fault of their own. Throughout the robo-signing scandal, lenders have downplayed their responsibility, arguing that there was likely no real harm from that particular kind of illegal behavior. This may or may not be true -- instances of wrongful foreclosures have been reported -- but there's certainly widespread harm from, for example, their refusal to give meaningful consideration to loan modifications.

Tribunal de Justicia Considera Un Administrador de Bancarrota Puede Recaudar Fondos de los Cheques no se Borran en el Día de la Presentación de la Quiebra

Fri, 28 Oct 2011 11:24:54 -0800

Como un abogado de bancarrota de Sacramento, que haga tomar el caso de un cliente antes de que él o ella presenta la petición de bancarrota. Hago esto con el fin de ayudarle a preparar la petición ante la actual presentación del capítulo 7 o el Capítulo 13. Preparación para la bancarrota puede significar muchas cosas, incluyendo la toma de decisiones estratégicas con respecto a los activos que son importantes para un individuo. Entender el proceso de bancarrota y conocer las reglas complejas convertido en un aspecto importante de cualquier capítulo 7 o la presentación del capítulo 13 con el fin de eliminar o minimizar la exposición de una persona a sus acreedores.

Por desgracia, no representados los litigantes a menudo no logran comprender la complejidad de un caso y que parece ser lo que pasó con el deudor en In re Ruiz, un caso en el Panel de Apelación de Quiebras de la Décima Corte de Apelaciones de Circuito de los EE.UU.. En este caso, José Ruiz y Carrie escribió cheques para compras de las empresas, una donación de caridad y su pago mensual de la hipoteca antes de peticiones de bancarrota del capítulo 7. Los controles no se había aclarado aún el día de la petición, por lo que su administrador argumentó que técnicamente aún tenía el dinero y deberían estar obligados a darle la vuelta a la finca. Un tribunal de quiebras en Utah no estaba de acuerdo, pero el BAP se invierte, lo que requiere a su vez más de cerca de $ 3.700.

Los cheques de Ruiz fueron escritos entre el 29 de marzo y 23 de abril de 2010, que presentó su petición de quiebra por vía electrónica el 24 de abril. En sus horarios, el de Ruiz enumeró una cuenta de cheques con $ 10.02. Este fue el número que sería verdad una vez que los cheques compensados, sin embargo, la cuenta en realidad contenía $ 3,764.99. El último de los cuatro despejó el 28 de abril de 2010. En el artículo 341 la audiencia, el fiduciario Ruiz descubrió la discrepancia y se mudó a les obligan a entregar el resto del dinero. El tribunal de quiebras denegó la petición del administrador, y encontraron que el dinero en cuestión no eran de propiedad del deudor. Por el contrario, encontró que la cuenta corriente fue una deuda por el banco a la de Ruiz, y que la deuda era de propiedad de la finca, el banco tenía un control real y la posesión del dinero. El tribunal sostuvo además que el fiduciario, no la de Ruiz, tenía la obligación de cobrar esa deuda en nombre de la masa de la quiebra. El síndico apeló.

En la apelación, el mandatario argumentó que la ley requiere a los deudores a su vez sobre los bienes de la masa de la quiebra, y porque el dinero todavía estaba técnicamente de propiedad del Ruiz, que bien puede seguir. Ruiz negó que controlaban el dinero o ha tenido el deber de pagar al fiduciario. El BAP cara con el síndico, el rechazo de la dependencia de la corte de bancarrota en el Citizens Bank of Maryland v. Strumpf. Por el contrario, el Grupo Especial citó los casos del Décimo Circuito y el Octavo, así como los precedentes de los tribunales de quiebras numerosas, sosteniendo que el dinero en una cuenta corriente a la fecha de petición es la propiedad de la masa de la quiebra. Control tuvo el Ruiz de los fondos a partir del día de la petición hasta que se cargarán en la cuenta, dijo el panel. Se analizó la exigencia del código de bancarrota de que este control sea "en el caso", pero concluyó que esto se aplica a cualquier momento durante el caso, no sólo cuando el administrador lo exige, porque sostener lo contrario sería permitir la evasión de la ley.

El panel se tomó el tiempo en la opinión de reconocer que su decisión pone a los deudores en una posición difícil, ya que ahora no tienen el dinero y podría haber sido procesado por suspender el pago. Tampoco es práctico para exigir al mandatario para actuar con rapidez, dijo. "A pesar de este resultado es poco para avanzar en la política del código de bancarrota de ofrecer a los deudores un nuevo comienzo a través de la quiebra, promueve una política igualmente válida de proporcionar una distribución justa y equitativa de los bienes de los deudores a los acreedores."

Court Holds Bankruptcy Trustee May Collect Funds From Checks Not Cleared on Day of Bankruptcy Filing

Tue, 18 Oct 2011 11:34:40 -0800

As a Sacramento bankruptcy attorney, I typically take a client's case before the he or she files the bankruptcy petition. I do this in order to help him or her prepare the petition before the actual filing Chapter 7 or Chapter 13. Preparation for bankruptcy can mean a lot of things, including making strategic decisions regarding which assets are important to an individual. Understanding the bankruptcy process and knowing the complex rules become an important aspect of any Chapter 7 or Chapter 13 filing in order to eliminate or minimize a person's exposure to his or her creditors.

Unfortunately, unrepresented litigants often fail to understand the complexities involved in a case and that seems to be what happened with a debtor in In re Ruiz, a case from the Bankruptcy Appellate Panel of the Tenth U.S. Circuit Court of Appeals. In this case, Jose and Carrie Ruiz wrote checks for business purchases, a charitable donation and their monthly mortgage payment just before petitioning for Chapter 7 bankruptcy. The checks had not yet cleared on the day of the petition, so their trustee argued that they technically still had the money and should be required to turn it over to the estate. A bankruptcy court in Utah disagreed, but the BAP reversed it, requiring them to turn over about $3,700.

The Ruiz's checks were written between March 29 and April 23 of 2010; they filed their bankruptcy petition electronically on April 24. On their schedules, the Ruiz's listed a checking account with $10.02. This was the number that would be true once the checks cleared; however, the account actually contained $3,764.99. The last of the four cleared on April 28, 2010. During the section 341 hearing, the Ruiz's trustee discovered the discrepancy and moved to require them to turn over the rest of the money. The bankruptcy court denied the Trustee's motion and found that the disputed money was not debtor property. Rather, it found that the checking account was a debt owed by the bank to the Ruiz's, and that debt was the estate's property; the bank had actual control and possession of the money. The court further held that the trustee, not the Ruiz's, had the obligation to collect that debt on behalf of the bankruptcy estate. The trustee appealed.

On appeal, the trustee argued that the law requires the debtors to turn over property of the bankruptcy estate, and because the money was still technically the Ruiz's property, he may properly pursue it. The Ruiz's denied that they controlled the money or had any duty to pay it to the trustee. The BAP sided with the trustee, rejecting the bankruptcy court's reliance on Citizens Bank of Maryland v. Strumpf. Rather, the panel cited Tenth and Eighth Circuit cases, as well as precedent from numerous bankruptcy courts, holding that the money in a checking account as of the petition date is the property of the bankruptcy estate. The Ruiz's had control over the funds from the day of the petition until they were debited from the account, the panel said. It analyzed the bankruptcy code's requirement that this control be "during the case," but concluded that this applies to any time during the case, not just when the trustee demands it, because to hold otherwise would enable evasion of the law.

The panel took time in the opinion to recognize that their decision puts the debtors in a tough position, since they now do not have the money and could have been prosecuted for stopping payment. Nor is it usually practical to require the trustee to take quick action, it said. "Although this result does little to advance the Bankruptcy Code's policy of providing Debtors a fresh start through bankruptcy, it does promote an equally valid policy of providing for a fair and equitable distribution of Debtors' assets to their creditors."

The lesson to be taken from this case is that it's imperative to be well informed before petitioning for bankruptcy. The Ruiz's clearly did not intend to abuse the system -- they wrote checks for ordinary expenses - however, they happened to make a mistake. As a result, they appear to be responsible for re-payment of this money. In fact, the bankruptcy appellate panel pointed out that they will end up paying the money twice, to the estate and to the original payees of the checks. While this result may be the legally correct conclusion, I argue that it does nothing to help the Ruiz's get a fresh start once they receive the discharge. For future bankruptcy filers, I strongly recommend that you talk to our Sacramento area bankruptcy attorneys before filing to avoid this kind of accidental error.

If you feel overwhelmed by your debt and don't see how you can ever pay it back, you should talk to a Sacramento Bankruptcy Attorney about whether bankruptcy is right for you. You can call us at 916-361-6028 or send us a message through our website.

Bankruptcy Appellate Panel Affirms that Debtor is in Better Postition to Keep House When Filing Bankruptcy Before Foreclosure Sale

Mon, 12 Sep 2011 11:45:03 -0800

As an attorney who protects my clients against foreclosure, I am very familiar with the concept of filing a Chapter 13 or Chapter 7 bankruptcy stop the foreclosure sale. Since the filing of a bankruptcy petition includes an automatic stay - a court order prohibiting all creditors from collecting against debts held by the debtor - the filing often results in providing the bankruptcy client with some temporary or even permanent relief.

The Chapter 7 or Chapter 13 bankruptcy can even help a debtor in the long run if the bankruptcy allows the debtor to catch up on any arrearages and reorganize their unsecured debts. This may also work in the event that a mortgage lender has a flawed claim on the property held by the debtor or has broken some sort of predatory lending law. However, as the Ninth Circuit Bankruptcy Appellate Panel ruled in Edwards v. Wells Fargo Bank, N.A., filing bankruptcy is not the right avenue to pursue for a debtor whose property has already been foreclosed against. In Edwards, the appellate Panel upheld the bankruptcy court's decision to grant relief from stay to the bank.

Lupi Paulo Edwards, from Southern California, filed a Chapter 7 bankruptcy petition in August of 2010. Her home lender, Wells Fargo, moved the court for relief from stay shortly thereafter. Wells Fargo included a copy of the Trustee's Deed whereby they purchased the property at a sale on May 17, 2010. Wells Fargo then began proceedings to eject Edwards from the property. Edwards attempted to oppose the bank and argued that Wells Fargo had no standing to request that the court allow it to begin the foreclosure proceedings.

In their decision, the Panel noted that under California law, a debtor no longer has an interest in the property after the foreclosure sale. Since Wells Fargo acquired title to the property on May 17, 2010 they had standing to request that the court permit them to proceed with the eviction despite the automatic stay granted in August. Edwards then argued that since she filed an adversary proceeding against Wells Fargo to determine whether they had legally foreclosed against her that the court should not have dissolved the automatic stay against Wells Fargo. The Panel disagreed with her and re-iterated that a bankruptcy court has the discretion to grant relief regardless of any adversary proceeding. Lastly, the Panel noted that California law does not permit a litigant to make arguments that undermine the legality of a foreclosure sale once they have lost the unlawful detainer case. In short, the Panel affirmed the bankruptcy court's actions.

As a Sacramento Bankruptcy Attorney I try to avail myself of the multiple options to keep my client in his or her house for as long as possible when they are behind on their mortgage and foreclosure is on the horizon. If there is one piece of advice I can give to anyone regarding foreclosure and bankruptcy that is that an individual must file their bankruptcy before any foreclosure sale in order to maximize his or her position to save their house. Once the foreclosure sale occurs and title vests in another individual or entity, it becomes almost impossible to keep the debtor from losing the residence.

Ninth Circuit Court of Appeal Rules Tax Debt can be Discharged in Second Bankruptcy

Tue, 26 Jul 2011 09:06:36 -0800

Sacramento area residents considering a Chapter 7 or Chapter 13 bankruptcy should be interested to learn about the recent United States Ninth Circuit Court of Appeals case: In re Brenda Marie Jones, which affects how a second bankruptcy filing affects a persons tax debts. The Ninth Circuit Court of Appeals governs all appeals made from Sacramento area federal courts, including bankruptcy matters.

Federal and State income taxes can typically be discharged if they were due more than three years ago. However, the three-year standard can be extended if the debt could not have been collected. This means that when an automatic stay is issued in a previous bankruptcy, the debt cannot be collected, which therefore extends the time period to which a debtor must wait before he or she can discharge that tax debt.

In the Brenda Marie Jones case, a California woman filing for a Chapter 7 bankruptcy owed a debt, more than three years old, to the California Franchise Tax Board (CFTB). Ms. Jones attempted to discharge that debt in her new bankruptcy but the CFTB argued that because Jones had previously filed for bankruptcy, they were prevented from collecting the tax debt and it was therefore improper for her to discharge the debt in the recently filed case.

Ms. Jones originally filed a joint Chapter 13 Bankruptcy in 2002. As with all bankruptcy filings, upon filing of the Chapter 13 petition, the automatic stay issued by the bankruptcy court froze all attempts by creditors to collect the debts, including the CFTB. In October of 2003 the Jones' filed a tax return and asked for an extension but failed to pay the balance due. The Jones came out of Chapter 13 in September of 2006. Later, Ms. Jones filed an individual Chapter 7 petition in October of 2007. Naturally, Ms. Jones included the tax debt in her Chapter 7 filing since it was more than three years old.

The CFTB moved to reopen Ms. Jones' bankruptcy in an attempt to collect the back taxes. The CFTB argued that the three-year window should have been extended due to the prior Chapter 13. While the bankruptcy court re-opened the Jones case it decided against the CFTB. The local bankruptcy court held the CFTB could have collected the debt either during or after Ms. Jones' bankruptcy. The CFTB appealed to the Bankruptcy Appeals Panel and then later to the Ninth Circuit.

In it's ruling, The Ninth Circuit specifically noted that the three-year discharge rule for tax debts related to Ms. Jones' Chapter 7 petition, not her Chapter 13 petition. The Court then looked at whether Ms. Jones' previous bankruptcy should have suspended the three-year rule. Ultimately, the Ninth Circuit concluded that the Chapter 13 should not have suspended the three year rule. The Court noted that the law permits the three-year rule to be suspended when a stay is in effect in a prior bankruptcy case.

The Ninth circuit noted that some property re-vests in a debtor after the Chapter 13 plan is confirmed. Since the tax debt arose after the Bankruptcy court confirmed the Jones' Chapter 13 plan, the Ninth Circuit found that the CFTB would have been free to collect against the Jones' anytime before Ms. Jones' filed for Chapter 7. Specifically, the Court noted that the CFTB had a year between the bankruptcies where it could have unquestionably collected the tax debt. For that reason, the Ninth Circuit decided that the bankruptcy court properly discharged the tax debt and the three-year rule could not be suspended.

As a Sacramento Bankruptcy Attorney, I believe this ruling can be regarded as a victory for bankruptcy debtors seeking to discharge tax debts more than three years old. Since tax debts are more difficult to discharge than most other debts, I still typically advise my clients to always take care of these debts before other creditors.

Demanda Despedido por el Juez Federal

Thu, 07 Jul 2011 11:52:13 -0800

Los residentes de California que residen en el área metropolitana de Sacramento pueden estar interesados en conocer una actualización de la jurisprudencia que podría afectar a cualquier modificación de préstamo hipotecario. La tendencia actual en relación con los litigios que rodean el Home Affordable Modification Program (HAMP) ha sido reafirmado por un juez de Washington DC en el caso, Doreen Edwards et al v. Aurora préstamo Administradores LLC. En Edwards, el demandante argumentó que un prestatario debe tener el derecho a demandar, ya que se vieron afectados por el acuerdo entre el HAMP Aurora, un administrador de préstamos privados y Fannie Mae.

Todos los demandantes en el caso fueron elegibles bajo HAMP para una modificación de préstamo hipotecario, pero se les negó, sin embargo por Aurora a pesar de que fueron calificados por el programa. El demandante citó "la incompetencia burocrática sin fin junto con la falta de un recurso efectivo para las denegaciones ilícito" como base para su contra Aurora, después de haber sido negado un préstamo modificado. La demanda alega una violación por parte de Aurora de su acuerdo independiente con Fannie Mae: (1) que Aurora no actuó de buena fe y trato justo y (2) Aurora violó su derecho al debido proceso. Aurora respondió que los demandantes no tenían derecho a demandar ya que no eran partes en el acuerdo con Fannie Mae y Aurora.

Rothstein juez estuvo de acuerdo con Aurora y sostuvo que los prestatarios individuales no tenían derecho a demandar porque no tenían intereses creados en virtud del acuerdo HAMP. El juez Rothstein se unió a numerosas decisiones de los tribunales lo que otros hallazgos similares. Los jueces en todos los tribunales de distrito de California han llevado a cabo esta misma decisión, incluyendo el Distrito Este de California, que atiende todos los casos presentados en el área de Sacramento. Estos tribunales han sostenido con el fin de que una persona tenga en pie, los demandantes propietario tenía que demostrar que Fannie Mae y Aurora la intención de incluir a los prestatarios, individual, a su acuerdo de HAMP.

Esencialmente, esto significa que sólo porque los propietarios tienen interés en la ejecución del contrato entre Fannie Mae y Aurora le da automáticamente derecho a participar en el programa HAMP. Rothstein juez también rechazó el argumento que el demandante de que Aurora tenía el deber de buena fe y trato justo. Ya que nunca los prestatarios tenían un contrato explícito con Aurora o Fannie Mae, el juez dictaminó que Aurora no tiene que darles la modificación.

Esta situación sería análoga a la que una persona insista en recibir el mismo trato en la compra de un coche, comprado en un concesionario de automóviles, hecho por un tercero en un vehículo similar. Mientras que el concesionario lo desea, puede ofrecer un trato similar, el juez Rothstein sostiene que la concesionaria de automóviles no se verán obligados a ofrecer el mismo trato a las partes por separado si no están dispuestos a hacerlo.

Como un abogado de bancarrota de Sacramento me gusta mantener mis clientes actualizados sobre las novedades en el mundo jurídico que puedan afectar su situación financiera. Si usted o alguien que usted conoce está considerando presentar el Capítulo 7 o Capítulo 13 de bancarrota que usted debe tener contacto con ellos a un abogado que tenga conocimiento sobre estos asuntos tan pronto como sea posible.

Class Action HAMP Lawsuit Dismissed by Federal Judge

Wed, 22 Jun 2011 13:57:09 -0800

California residents who reside in the Sacramento metropolitan area may be interested to know an update in case-law that could potentially impact any home loan modification. The ongoing trend regarding litigation surrounding the Home Affordable Modification Program (HAMP) has been re-affirmed by a Washington D.C. Judge in Doreen Edwards et al v. Aurora Loan Servicers LLC. In Edwards, the Plaintiff argued that an individual borrower should have the right to sue because they were impacted by the HAMP agreement between Aurora , a private loan servicer and Fannie Mae.

All Plaintiffs in the case were eligible under HAMP for a home loan modification but were nonetheless denied by Aurora even though they were qualified under the program. The plaintiff's cited "endless bureaucratic incompetence coupled with a lack of effective recourse for wrongful denials" as a basis for their against Aurora after having been denied a modified loan. The lawsuit alleged a violation by Aurora of its independent agreement with Fannie Mae: (1) that Aurora failed to act in good faith and fair dealing and (2) Aurora violated their right to Due Process. Aurora responded that the plaintiffs were not eligible to sue since they were not parties to the agreement with Fannie Mae and Aurora.

Judge Rothstein agreed with Aurora and held that the individual borrowers had no right to sue because they had no vested interest under the HAMP agreement. Judge Rothstein joined numerous other court decisions making similar findings. Judges in all District Courts of California have held this same decision including the Eastern District of California, which hears all cases brought in the Sacramento area. These courts have held in order for a person to have standing, the homeowner plaintiffs had to show that Fannie Mae and Aurora intended to include the borrowers, individually, to their HAMP agreement.

Essentially, this means that just because the homeowners had an interest in the performance of the contract between Fannie Mae and Aurora does automatically entitle them to participate in the HAMP program. Judge Rothstein also dismissed that plaintiff's argument that Aurora had a duty of good faith and fair dealing. Since the borrowers never had an explicit contract with Aurora or Fannie Mae, the Judge ruled that Aurora did not have to give them the modification.

This situation would be analogous to having a person insist on receiving the same deal on a car purchase, bought at a car dealership, made by a separate party on a similar vehicle. While the dealership may want to offer a similar deal, the Judge Rothstein holds that the car dealership will not be forced to offer the same deal to separate parties if they are not inclined to do so.

As a Sacramento Bankruptcy Attorney I like to keep my clients updated on developments in the legal world that may affect their financial circumstances. If you or someone you know is considering filing Chapter 7 or Chapter 13 Bankruptcy you should have them contact a lawyer who is knowledgeable on these matters as soon as possible.

California State Senate Kills Foreclosure Prevention Bill

Tue, 03 May 2011 09:56:26 -0800

Lawmakers in Sacramento decided to vote against a bill that would have stopped "dual track" foreclosures across the state last week. The legislation, SB 729, required lenders to completely evaluate a borrower for a loan modification before they filed the notice of default, which officially begins the foreclosure process.

Senate President Pro Tem Darrell Steinberg (D-Sacramento) and Sen. Mark Leno (D-San Francisco) have authored this sweeping legislation that was designed to limit dual tracking, which is the practice by mortgage lenders to pursue foreclosure at the same time they request a loan modification.

According to the LA Times, SB 729 would have gone further than any existing anti-foreclosure measure by preventing dual-track foreclosures for all California mortgages. The bill would have required lenders to completely decline a modification before it began the foreclosure proceedings. Had lenders failed to make a definite decision regarding the modification SB 729 would permit the lender to halt or void the foreclosure for up to a year after the sale of the house.

The lending industry has argued that the two-track process allows it to protect its investments. The practice, however, has been under close scrutiny by regulators as well and lawmakers with the on-set of the "robo-signing" scandal, which revealed multiple mistakes in the foreclosure process.

The dual-track foreclosure process has been heavily criticized by borrowers as well as consumer advocates as misleading and un-fair. Complaints arise because while a borrower gets accepted for a loan modification plan, makes payments, and has no significant financial changes can find themselves et foreclosed upon under a dual-track system. This happens sometimes without notice to the borrower. The federal HAMP program has rules that forbid the dual-track practice, however those rules apply only to a HAMP loan modification and there is no penalty if a lender breaks the rule. Banks and federal regulators have recently settled a lawsuit that prevents banks to pursue foreclosure after a they have approved a modification. Unfortunately, the law remains silent regarding the pursuit of foreclosures during consideration of the loan modification.

As a Sacramento Bankrupty Attorney I like to stay apprised of the developments in the law that effect local residents. Many of my clients confronted with the foreclosure issue are more interested in getting definitive answers rather than remain in the uncertain process of foreclosure or modification. If you or someone you know is caught in the rapture of this contentious issue you may want to consider speaking with someone knowledgeable on the subject.

Las Modificaciones de Préstamos Parecen Estar en el Mejor Interés de los Inversores

Mon, 28 Mar 2011 10:18:13 -0800

Abogados de quiebra en Sacramento que archivan el Capítulo 7 y Capítulo 13 bancarrotas en nombre de las personas se alegrarán de saber que el Centro para Préstamos Responsables ha publicado un estudio que muestra que tiene más sentido para los prestamistas a modificar préstamo propietario de una casa en dificultades es que a excluir de inmediato en el individuo a la propiedad. El Centro publicó un estudio el 22 de marzo que investigó si los inversores que tenían un préstamo moroso podría recuperar más dinero a través de una ejecución hipotecaria o modificación. El estudio utilizó la prueba del valor actual neto (VAN), que es utilizado por el programa de modificación de préstamos federales, además de numerosos programas privados. La respuesta resultó ser (en la mayoría de las circunstancias), si el préstamo se titulizados o no, que tenía más sentido para modificar porque el prestador recibió más dinero en el largo plazo.

Los autores explican que, al considerar la posibilidad de modificar un préstamo, un inversor prudente debe equilibrar el coste de excluir del mercado a los costos de reducir el pago mensual del prestatario. La prueba de VPN es una herramienta preparada para el cálculo de este ratio y los autores de usar el instrumento se puede evaluar más de 1.500 casos de prueba. Los autores también pudieron incluir diferentes circunstancias, tales como el tamaño original del préstamo, los valores de propiedad diferentes, y así como el tamaño de la reducción de los pagos mensuales. Según el estudio de entonces, si el resultado final de la prueba muestra una tasa más baja de nuevo por defecto de la tasa real de re-forma predeterminada, el valor de la modificación del préstamo es superior a lo que podría ser conseguido a través de la ejecución hipotecaria. Por lo tanto, bajo estas condiciones, el prestamista debe conceder una modificación de préstamo en lugar de iniciar procedimientos de ejecución hipotecaria. El estudio del Centro calcula que la mayoría de las circunstancias del mundo real debería conducir a una sesión de ejercicios de préstamo.

Según el estudio, una modificación de préstamo que los descuentos de los préstamos en un 10% sería más rentable que el 86% del tiempo en virtud de los números de auto-curación. Así, el Centro ha concluido que las pruebas de VPN debe comenzar a inspirar a la voluntad de un prestamista para implementar el proceso de modificación de préstamo en su modelo de negocio.

Como un abogado de Bancarrota de Sacramento Estoy dedicado a asegurar que mis clientes reciben la mejor información disponible para ayudar a determinar qué curso de acción más adecuado para su situación financiera. Si el Capítulo 7, Capítulo 13, o una modificación del préstamo se basa en el mejor interés económico de un individuo es, por supuesto, determinado por las circunstancias especiales que son únicos para cada persona. Como un profesional local que incorpore los litigios, así como las negociaciones agresivas para obtener una consideración justa y tratamiento para las aplicaciones de mi cliente de modificación de préstamo, así como un trato igual y justo de la corte si se deciden a declararse en quiebra.

Si usted o alguien que usted conoce ha estado lidiando con este tipo de circunstancias hace poco tiempo, póngase en contacto con alguien que tiene experiencia en tratar con estas cuestiones a fin de saber qué opciones están disponibles y por lo tanto pueden comenzar a volver a tomar el control de las condiciones económicas que han afectado significativamente su situación de vivienda.

Loan Modifications Appear to be in the Best Interests of Investors

Fri, 25 Mar 2011 10:26:28 -0800

Sacramento bankruptcy lawyers who file Chapter 7 and Chapter 13 bankruptcies on behalf of individuals will be glad to know that the Center for Responsible Lending has published a study that shows that it makes more sense for lenders to modify a distressed homeowner's loan than to immediately foreclose on the individual's property. The Center released a study on March 22 that researched whether investors who held a defaulting loan could retrieve more money through foreclosure or modification. The study used the net present value test (NPV), which is used by the federal loan modification program in addition to numerous private programs. The answer turned out to be (under most circumstances), whether the loan was securitized or not, that it made more sense to modify because the lender received more money in the long run.

The authors explained that when considering whether to modify a loan, a prudent investor must balance the cost of foreclosing with the costs of reducing a borrower's monthly payment. The NPV test is a ready tool to calculate this ratio and the authors using the instrument were able to evaluate over 1,500 test cases. The authors were also able to include different circumstances such as original size of the loan, different property values, and well as the size of the reduction in monthly payments. According to the study then, if the end result of the test shows a lower re-default rate than the actual re-default rate, the value of modifying the loan is higher than what could be gotten through foreclosure. Therefore, under these conditions the lender should grant a loan modification rather than initiate foreclosure proceedings. The Center's study calculated that most real-world circumstances should lead to a loan workout.

According to the study, a loan modification that discounts the loan by 10% would be profitable more than 86% of the time under existing self-cure numbers. Thus, the Center has concluded that NPV tests should begin to inspire a lender's willingness to implement the loan modification process into its business model.

As a Sacramento Bankruptcy Attorney I am dedicated to ensure that my clients receive the best information available to assist them in determining what course of action works best for his or her financial situation. Whether Chapter 7, Chapter 13, or a Loan Modification rests in an individual's best economic interest is, of course, determined by the special circumstances that are unique to every person. As a local practitioner I incorporate litigation as well as aggressive negotiations to get fair consideration and treatment for my client's loan modification applications as well as equal and fair treatment from the court should they decide to file for bankruptcy.

If you or someone you know has been dealing with these sorts of circumstances recently, you should contact someone who has experience dealing with these issues in order to know what options may be available and therefore can begin to re-take control over the economic conditions that have significantly affected your living situation.

Modficiations préstamo concedido con menos probabilidades de Titulización de préstamos Según Reserva Federal de Chicago

Fri, 25 Feb 2011 09:21:07 -0800

Datos recientes demuestran que los profesionales en el área metropolitana de Sacramento ya han tomado nota con respecto a las modificaciones de préstamos que se busca por individuos o corporaciones de presentación para el Capítulo 7 de bancarrota. El 3 de febrero de 2011, la Federal Reserve Bank de Chicago, publicó un estudio que muestra que los préstamos hipotecarios celebrada banco-es cuarto a un tercio por ciento más propensos a ser modificados de una hipoteca titulizada similar. El estudio también muestra que las personas que reciben la modificación del préstamo son casi el 10 por ciento menos propensos a dejar de pagar el nuevo préstamo generados por el banco. Del mismo modo, el Centro para la Integridad Pública señala que los propietarios tienen más probabilidades de obtener su préstamo renegociado si un banco sea dueño de su hipoteca por un margen del 26% - 36%.

La práctica de la titulización consiste en los bancos de inversión o intermediarios que los préstamos individuales paquete en una piscina por el que los inversores son capaces de comprar una participación en el conjunto de préstamos con los prestamistas que continúa reuniendo los pagos mensuales. Este "titulización" es completamente legal, pero es ampliamente culpado por su contribución a la crisis inmobiliaria, ya que permite instituciones de crédito para otorgar préstamos de alto riesgo y luego pasar el riesgo de impago a los inversores que compraron el paquete de fondos de préstamo.

Los prestatarios tienen nada que decir en cuanto a si el préstamo en su residencia se ha convertido en titulizados de esta manera. Desafortunadamente, estos prestatarios deben hacer frente a las consecuencias de sus préstamos han sido titulizados si buscan una modificación posterior. El aumento en las probabilidades de recibir una modificación de préstamo existente en un banco de préstamo celebrado parece que se mantienen firmes, independientemente de la calificación crediticia del prestatario. Las razones para esto puede ser debido a problemas de coordinación entre los inversores, las restricciones legales, así como la falta de incentivos administradores financieros (por ejemplo, que los administradores controlar los "préstamos", pero no tienen una participación de propiedad ya que se ha pasado a lo largo de los inversores).

Siempre estoy interesado en ver los datos que arroja luz sobre la vivienda actual y la situación financiera por la que atraviesa la mayoría de nosotros en la nación. Aunque la titulización se atribuyó inicialmente como un factor que contribuye a la atención de crisis de la vivienda a la materia desde entonces se ha desplazado a otras zonas. Un prestamista voluntad de participar en los debates de modificación de préstamos sigue siendo el mayor problema que enfrentan los propietarios de casas cuando se trata de aferrarse a su residencia. Sin embargo, esperamos que este tipo de estudios proporcionará un marco a los encargados de la política futura que pueda tratar de resolver o evitar situaciones similares en el futuro.

Como un abogado de Bancarrota de Sacramento que he escuchado de muchas personas que han intentado durante meses para obtener una modificación de préstamo para la vivienda de éste. Independientemente, de si o no un préstamo hipotecario ha sido titulizados el propietario tiene derecho a ser considerados para una modificación de HAMP. Si una persona califica bajo HAMP que su préstamo se requiere para ser modificado y hecho permanente. Dado que estas cuestiones son a menudo complejos y lentos mis oficinas están a disposición de cualquier persona que ha considerado la opción de explorar más.

Loan Modficiations Less Likely Granted with Securitized Loan According to Chicago Federal Reserve

Fri, 18 Feb 2011 10:22:20 -0800

Recent data proves what practitioners in the Sacramento metropolitan area have already noted with regard to the loan Modifications being sought by individuals or corporations filing for Chapter 7 bankruptcy. On February 3, 2011 the Federal Reserve bank of Chicago released a study that shows that bank -held mortgage loans are one fourth to one third percent more likely to be modified than a similar securitized mortgage. The study also shows that individuals who receive the loan modification are almost 10 percent less likely to default on the new loan generated by the bank. Similarly, the Center for Public Integrity notes that homeowners are more likely to get their loan renegotiated if a bank owns their mortgage by a margin of 26% - 36%.

The practice of securitization consists of investment banks or brokers who bundle individual loans into a pool whereby investors are then able to buy a stake in the pool of loans with the lenders continuing to collect the monthly payments. This "securitization" is completely legal, but is widely blamed for contributing to the housing crash since it allowed institutional lenders to make high risk loans and then pass the risk of default onto the investors who purchased the bundled loan pools.

Borrowers have no say as to whether the loan on their residence has become securitized in this fashion. Unfortunately, these borrowers must deal with the consequences of their loan having been securitized if they seek a modification later. The increased chances of receiving a loan modification existing in a bank held loan appear to remain firm regardless of the borrower's credit rating. The reasons for this may be due to coordination problems among investors, legal constraints, as well as a lack of servicers' financial incentives (such that the servicers control the "loans" but do not have an ownership stake since it has been passed along to investors).

I am always interested to see data that sheds light on the current housing and financial situation being experienced by most of us in the nation. While securitization was initially blamed as a contributing factor to the housing crisis attention to the matter has since been shifted to other areas. A lender's willingness to engage in loan modification discussions remains the biggest issue facing a home owner when trying to hold onto his or her residence. However, hopefully these types of studies will provide a framework to future policy makers who can attempt to resolve or avoid similar scenarios in the future.

As a Sacramento Bankruptcy Attorney I have heard from numerous individuals who have tried for months to get a modification on his or her home loan. Regardless, of whether or not a home loan has been securitized the homeowner has a right to be considered for a HAMP modification. If a person qualifies under HAMP their loan is required to be modified and made permanent. Since these questions are often complex and time consuming my offices are available to anyone who has considered exploring the option further.

Tribunal Federal Comienza Represión de Fraude de Bancarrota

Wed, 09 Feb 2011 09:05:26 -0800

Sacramento residentes, que haya considerado o se presente Capítulo 7 o Capítulo 13 de bancarrota debe tener cuidado con las penas severas asociadas con el fraude de quiebra. Un informe del Des Moines Register muestra lo grave que el gobierno federal lleva a las personas que abusan del código de bancarrota.

Un juez federal sentenció Gerald Schurer a más de cuatro años de prisión después de que él y su esposa fueron condenados por su participación en una estafa para aprovecharse del código de bancarrota revisado. Schurer esposa recibió una sentencia de dos años por su papel en la trama.

Los fiscales alegan que el hecho Schuerers ventas falsas de activos a "información privilegiada" en el entendimiento de que los amigos o parientes que devolver la propiedad personal a la Schuerers después de haber recibido su aprobación de la gestión de la quiebra. El Schuerers dispuestos de joyería, material, vehículos y una embarcación de este modo antes de que presentó su petición con el fin de evitar los elementos convirtiendo en una parte de su masa de la quiebra. En total, el valor total de los activos ocultos ascendieron a aproximadamente $ 380.000.

Después de deshacerse de sus bienes a los miembros de la familia, la Schurers supuestamente se mudó a Florida, donde recibirían mayores límites a las exenciones su bancarrota, se declaró en quiebra, y luego regresó a Iowa para recuperar sus pertenencias de los miembros de la familia. El Schuerers fueron juzgados y condenados en la Florida desde que presentaron su petición de bancarrota en esa jurisdicción.

El administrador de EE.UU., una división del Departamento de Justicia y los Tribunales Federales toman muy en serio el fraude de bancarrota. Debido a que la ley se basa en la auto-revelación de los activos de los deudores individuales, el deudor debe declarar bajo pena de perjurio, que los activos que han incluido en sus planes de quiebra son exactos y representar a los individuos la situación financiera real.

Dado que la distinción entre tener un caso activo o no un caso en que el administrador puede ejecutar la hipoteca y vende una propiedad de los deudores para pagar a los acreedores puede ser minima. Cuando existe el caso de que los activos del deudor exceden las excepciones especificadas a continuación, surge la tentación para que el deudor no revelar o precisión el valor de la propiedad que figuran en las listas de quiebra.

A menudo los deudores individuales no están familiarizados con las excepciones que pueden aplicarse a ellos y la manera apropiada en los que la demanda a proteger su propiedad de la entidad fiduciaria. Es por eso que siempre sugieren una persona teniendo en cuenta el Capítulo 7 o Capítulo 13 de bancarrota debe contratar a un abogado que esté familiarizado con la ley y apropiadamente puede clasificar y reclamar la propiedad con el fin de evitar que sean mal categorizado o no reclamados que a continuación expone el deudor de la responsabilidad penal.

Como un abogado de Bancarrota de Sacramento estoy familiarizado con la ley y las exenciones que están disponibles para los deudores individuales al presentar su petición de bancarrota. Siempre tomo un inventario vigorosa de mi deudores propiedad personal y la situación financiera con el fin de garantizar que la propiedad está en la lista adecuada para evitar esta situación que el Schuerers se encontraban.

Federal Court Begins Crackdown on Bankruptcy Fraud!

Tue, 08 Feb 2011 12:07:21 -0800

Sacramento residents who have recently considered or filed Chapter 7 or Chapter 13 bankruptcy should beware the stiff penalties associated with Bankruptcy fraud. A report from the Des Moines Register shows just how serious the federal government takes people who are abusing the bankruptcy code.

A Federal Judge sentenced Gerald Schurer to more than four years in prison after he and his wife were convicted for their part in a scam to take advantage of the revised bankruptcy code. Schurer's wife received a two year sentence for her role in the plot.

Prosecutors claim the Schuerers made false sales of assets to "insiders" with the understanding that the friends or relatives would return the personal property to the Schuerers after they had received their discharge in bankruptcy. The Schuerers disposed of jewelry, stock, vehicles, and a boat in this manner before they filed their petition in order to avoid those items becoming a part of their bankruptcy estate. In all, the total value of hidden assets totaled approximately $380,000.

After disposing of their property to family members, the Schurers allegedly moved to Florida where they would receive higher limits on their bankruptcy exemptions, filed for bankruptcy, and then returned to Iowa to retrieve their possessions from the family members. The Schuerers were tried and convicted in Florida since they filed their bankruptcy petition in that jurisdiction.

The U.S. Trustee, a division of the Justice Department and the Federal Courts take bankruptcy fraud very seriously. Because the law rests on self-disclosure of the debtors individual assets, the debtor must testify under penalty of perjury that the assets they have included on their bankruptcy schedules are accurate and represent the individuals actual financial situation.

Since the distinction between having a non-asset case or a case where the trustee can foreclose and sell a debtors property in order to pay creditors can be razor thin. When the case exists that a debtor's assets exceed the specified exemptions then the temptation arises for the debtor to fail to disclose or accurately value the property listed in the bankruptcy schedules.

Oftentimes individual debtors are unfamiliar with the exemptions that may apply to them and the proper manner in which to claim them to protect their property from the trustee. This is why I always suggest a person considering Chapter 7 or Chapter 13 bankruptcy should hire an attorney who is familiar with the law and can appropriately classify and claim property in order to avoid them being miscategorized or unclaimed which then exposes the debtor to criminal liability.

As a Sacramento Bankruptcy Attorney I am familiar with the law and the exemptions that are available to individual debtors when filing their bankruptcy petition. I always take a vigorous inventory of my debtors personal property and financial situation in order to ensure that the property is listed properly in order to avoid this situation that the Schuerers found themselves.