Cutting Edge Bankruptcy & Debt Collection Law

President Barack Obama with gay Congressman Barney Frank at the White House.

In an apparent reversal of his promises to the gay community and their advocates not to defend the Defense of Marriage Act in court President Obama and Attorney General Eric Holder filed an appeal today in the California bankruptcy court Chapter 13 case that struck down DOMA.

Gay rights activists will surely see this as a disappointment as they have been promised otherwise recently.  Apparently the Justice Department’s policy of not defending DOMA does not apply to bankruptcy.  Even though the Ninth Circuit has the most well respected and established BAP Bankruptcy Appellate Panel consisting of bankruptcy judges the U.S. Trustee has elected to appeal to the District Court instead.  The most likely explanation is that 19 of the 21 bankruptcy judges of the Central District of California signed onto the opinion.  Although an appeal to the BAP will be heard only by judges from other districts, it is likely the Obama administration fears that they will be too favorable toward the gay couple just like their colleagues so the U.S. Trustee is gambling on getting a less pro-gay district judge.

Read the documents:

Docket Report for the gay bankruptcy case under Chapter 13.

Opinion by California Bankruptcy Judges Striking down DOMA

Notice of Appeal to District Court by President Obama of the bankruptcy judges overturning DOMA.

Election to Appeal to the District Court instead of the BAPBankruptcy Appellate Panel.

Motion for Leave to Appeal the bankruptcy court decision striking down DOMA.

The L.A. Dodgers have filed for Chapter 11 bankruptcy - read the documents and see what Manny Ramirez and other players are owed.

The L.A. Dodgers have filed for Chapter 11 bankruptcy.  The move was apparently motivated by the owner’s divorce and that a court struck down a post-nupital agreement that would have allowed him to keep the Dodgers as separate property.  Business will continue to operate as usual and the filing in the Delaware Bankruptcy Court shows more than $20 million owed to Manny Ramirez and a number of other players also owed handsome amounts.  Additionally a day before filing the Dodgers managed to obtain a $150,000 million dollar credit facility used to finance operations while in bankruptcy.  Read the documents below:

Docket Report of the Main Case listing all documents filed.

1 Bankruptcy Petition – amounts owed to each player

3 Motion for Joint Administration of related cases

3-1 Exhibit A

4 Declaration in Support of First Day Motions – Financial situation of L.A. Dodgers

5 Motion to Continue Using Existing Bank Accounts

5-1 Exhibit A – Proposed Order

6 Motion to Prevent Disconnection of Certain Utilities

6-1 Exhibit A – Utility List

6-2 Exhibit B – Proposed Interim Order

6-3 Exhibit C – Proposed Final Order

7 Motion to Continue Insurance Programs

7-1 Exhibit A – Insurance Programs and Policies

7-2 Exhibit B – Proposed Order

8 Motion to Pay Sales and Use Taxes

8-1 Exhibit A – Proposed Order

9 Motion to Pay Prepetition Wages

9-1 Exhibit A – Proposed Order

10 Motion to Honor Pre-Petition Obligations

10-1 Exhibit A – Proposed Order

11 Motion to Pay Critical Vendors

11-1 Exhibit A – Proposed Order

12 Motion to Perform Obligations Under Collective Bargaining Agreements

12-1 Exhibit A – Proposed Order

13 Motion to Approve Debtor in Possession Financing – $150 million dollar credit facility.

13-1 Exhibit A – Interim Order for $150 million dollar credit facility.

13-2 Exhibit B – Commitment Letter for $150 million dollar credit facility.

13-3 Exhibit C – Budget

14 Notice of Hearing on June 28, 2011 for First Day Motions

15 Notice of Agenda for First Day Motion Hearing on June 28, 2011

17 List of Creditors including baseball players owed money

Photo courtesy of Wikimedia Commons.

Flagstar Bank is hiring people for the ABF Afterbankruptcy Foundation's tour with Stephen Snyder's seminar. Photo courtesy of Wikimedia Commons.

Just announced by Stephen Snyder, Flagstar Bank is hiring 75 experienced mortgage originators who need to have worked full time in that business.  They will be speaking to recent bankruptcy filers who attend Snyder’s seminar tour throughout the country.

Flagstar is a sponsor of Snyder’s tour and is one of the leading lender’s for government backed mortgages which constitute an increasing percentage of mortgages written since the crisis in the financial services sector.  While Flagstar has been cited as a potentially troubled bank, credit should be given for their efforts to work with bankruptcy filers to obtain mortgages.  The person is charge of the bankruptcy filer outreach efforts, Rebecca Stark, has work with Stephen Snyder for almost a decade or more, and has through her previous affiliations with RBC Mortgage and Home 123 sponsored Snyder’s seminars previously and published CD’s with Snyder.  The presence of Stark at Flagstar is in my opinion a good reason to work with or apply for a loan from that institution considering her excellent track record.

As I represent a number of people in the mortgage industry who file for bankruptcy themselves, often to save their home from a troubled mortgage company, I warmly recommend my clients with mortgage originator experience to pursue this job opportunity.  Those who have filed bankruptcy themselves are in a special position to relate to bankruptcy filers and would be excellent for this job as it involves outreach to bankruptcy filers.

Contact Rebecca Stark to apply at Rebecca.Stark@flagstar.com and be sure to make the subject line of the email “LAB” to ensure proper routing.

Chapter 13 bankruptcy filers rejoice as Macy's is hiring. Photo courtesy of Daniel Schwen.

Macy’s is advertising on Facebook that they are hiring.  For Chapter 13 filers a second job can be a blessing making it easier to make the payments necessary to save your home and save your vehicles.  This will increase the chances of a successful completion of your Chapter 13 bankruptcy plan.

A link to Macy’s job system  can be found below:

https://macys.taleo.net/careersection/macys_retail_jsa_career_section/moresearch.ftl?jobfield=42101430233&keyword=seo&location=4201430233&cm_mmc=Google_Facebook-_-Recruiting+-+F_SEO+Manager-_-facebook-_-Facebook_mkwid_POGJ8KQ2_|-|POGJ8KQ2

Photo courtesy of Daniel Schwen

Houston now has the largest increase in foreclosure rates together with Seattle and Atlanta. Photo courtesy of D. B. King on Wikimedia Commons.

ABC News has reported that Houston and Atlanta are joining Seattle and other West Coast and far Southwest cities in seeing higher foreclosure rates at least the increase in the rate.  These cities perhaps with the exception of Seattle have not been as badly hit by foreclosures recently.

Walmart to hire 450 in North Houston. Photo by Magnus Manske.

The Houston Business Journal reports that Walmart plans to hire 450 people for its new store at the old Northline Mall site on the North Freeway at Crosstimbers.  This comes as great news for jobseekers who want a job close in without a long commute.  They are apparently taking applications very soon so now is the time to apply.  It will be at Walmart wages of course so do not expect great pay!

It is hard to imagine that debt collectors run their businesses from prison cells. Photo Courtesy of Marine Perez.

New York Attorney General Andrew Cuomo is charging a debt collector with threatening to imprison those who do not pay their debts.  The irony is that he ran the business from a prison cell.  Read more about the debt collector running the agency from prison. 

Photo courtesy of Marine Perez.

Try to void directory assistance calls.  We are all used to being charged 50 cents on our home phone bill and forget that mobile phone carriers might charge a lot more as in three to four times as much.  Here a a couple of options:

1.  Free services

1-800-FREE411 or 1-800-373-3411
1-800-GOOG-411 or 1-800-466-4411

2.  Use your smart phone’s web browser to google the business or use another directory assistance site.  Many smart phones allow you to dial the number simply by clicking on it.

Photo courtesy of Kprateek88.

Contrary to earlier unconfirmed reports that the Harris County Commissioners’ Court had cancelled the foreclosure sales on August 5, the sales are apparently proceeding anyway.   The 2007 amendments to the Texas Property Code do not allow the commissioners to prohibit the sales during inclement weather, rather they allow the mortgage company an additional 48 hours after the deadline to file the 21 day notice of the sale when on the last day the court house was closed.  It is very telling that the mortgage companies lack the decency to cancel the sales.  It is not surprising to most of us as we know that they hold sales on January 1 and July 4 every time when these dates fall on the first Tuesday of the month.  The statutory provision  is listed below:

§ 51.002.  SALE OF REAL PROPERTY UNDER CONTRACT LIEN.
(a)  A sale of real property under a power of sale conferred by a
deed of trust or other contract lien must be a public sale at
auction held between 10 a.m. and 4 p.m. of the first Tuesday of a
month.  Except as provided by Subsection (h), the sale must take
place at the county courthouse in the county in which the land is
located, or if the property is located in more than one county, the
sale may be made at the courthouse in any county in which the
property is located.  The commissioners court shall designate the
area at the courthouse where the sales are to take place and shall
record the designation in the real property records of the
county.  The sale must occur in the designated area.  If no area is
designated by the commissioners court, the notice of sale must
designate the area where the sale covered by that notice is to take
place, and the sale must occur in that area.
(b)  Except as provided by Subsection (b-1), notice of the
sale, which must include a statement of the earliest time at which
the sale will begin, must be given at least 21 days before the date
of the sale by:
(1)  posting at the courthouse door of each county in
which the property is located a written notice designating the
county in which the property will be sold;
(2)  filing in the office of the county clerk of each
county in which the property is located a copy of the notice posted
under Subdivision (1); and
(3)  serving written notice of the sale by certified
mail on each debtor who, according to the records of the mortgage
servicer of the debt, is obligated to pay the debt.
(b-1)  If the courthouse or county clerk’s office is closed
because of inclement weather, natural disaster, or other act of
God, a notice required to be posted at the courthouse under
Subsection (b)(1) or filed with the county clerk under Subsection
(b)(2) may be posted or filed, as appropriate, up to 48 hours after
the courthouse or county clerk’s office reopens for business, as
applicable.
(c)  The sale must begin at the time stated in the notice of
sale or not later than three hours after that time.
(d)  Notwithstanding any agreement to the contrary, the
mortgage servicer of the debt shall serve a debtor in default under
a deed of trust or other contract lien on real property used as the
debtor’s residence with written notice by certified mail stating
that the debtor is in default under the deed of trust or other
contract lien and giving the debtor at least 20 days to cure the
default before notice of sale can be given under Subsection (b).
The entire calendar day on which the notice required by this
subsection is given, regardless of the time of day at which the
notice is given, is included in computing the 20-day notice period
required by this subsection, and the entire calendar day on which
notice of sale is given under Subsection (b) is excluded in
computing the 20-day notice period.
(e)  Service of a notice under this section by certified mail
is complete when the notice is deposited in the United States mail,
postage prepaid and addressed to the debtor at the debtor’s last
known address. The affidavit of a person knowledgeable of the facts
to the effect that service was completed is prima facie evidence of
service.
(f)  Each county clerk shall keep all notices filed under
Subdivision (2) of Subsection (b) in a convenient file that is
available to the public for examination during normal business
hours.  The clerk may dispose of the notices after the date of sale
specified in the notice has passed.  The clerk shall receive a fee
of $2 for each notice filed.
(g)  The entire calendar day on which the notice of sale is
given, regardless of the time of day at which the notice is given,
is included in computing the 21-day notice period required by
Subsection (b), and the entire calendar day of the foreclosure sale
is excluded.
(h)  For the purposes of Subsection (a), the commissioners
court of a county may designate an area other than an area at the
courthouse where sales under this section will take place that is in
a public place within a reasonable proximity of the county
courthouse and in a location as accessible to the public as the
courthouse door.  The commissioners court shall record that
designation in the real property records of the county.  A sale may
not be held at an area designated under this subsection before the
90th day after the date the designation is recorded.  The posting
of the notice required by Subsection (b)(1) of a sale designated
under this subsection to take place at an area other than an area of
the courthouse remains at the courthouse door of the appropriate
county.

Acts 1983, 68th Leg., p. 3525, ch. 576, § 1, eff. Jan. 1, 1984.
Amended by Acts 1984, 68th Leg., 2nd C.S., ch. 18, § 3(b), eff.
Oct. 2, 1984;  Acts 1987, 70th Leg., ch. 540, § 1, eff. Jan. 1,
1988;  Acts 1993, 73rd Leg., ch. 48, § 5, eff. Sept. 1, 1993;
Acts 2003, 78th Leg., ch. 554, § 2, eff. Jan. 1, 2004.

Amended by:
Acts 2005, 79th Leg., Ch. 533, § 1, eff. June 17, 2005.
Acts 2005, 79th Leg., Ch. 555, § 1, eff. September 1, 2005.
Acts 2007, 80th Leg., R.S., Ch. 903, § 2, eff. June 15,
2007.

§ 51.0021.  NOTICE OF CHANGE OF ADDRESS REQUIRED.  A
debtor shall inform the mortgage servicer of the debt in a
reasonable manner of any change of address of the debtor for
purposes of providing notice to the debtor under Section 51.002.

Added by Acts 2003, 78th Leg., ch. 554, § 1, eff. Jan. 1, 2004.

The U.S. Senate passed HR 3221 on Saturday and the President indicated that he would sign the bill into law Monday. While the bill does expand the availability of government insured home loans to a number of borrowers, the bill fails to address the eight hundred pound gorilla which is the mortgage companies who refuse to work with borrowers facing financial difficulties. The bill does nothing to force those mortgage companies to work with borrowers. All it does is it allows mortgages to be refinanced into government loans if the current lender consents and it appears to give loan servicers more flexibility in working out solutions. What is really missing is the ability of consumers to force lenders to modify the loans and the ability to do so in a bankruptcy. Right now real estate investors, corporations, and everyone else have this privilege but homeowners may not modify the loans on their principal residence. Regardless, regulators have indicated that it may take a year to promulgate regulations implementing this law.

Sections of the bill of interest are:

SEC. 402. SAFE HARBOR FOR QUALIFIED LOAN MODIFICATIONS OR WORKOUT PLANS FOR CERTAIN RESIDENTIAL MORTGAGE LOANS.

(a) Standard for Loan Modifications or Workout Plans- Absent contractual provisions to the contrary–

• (1) the duty to maximize, or to not adversely affect, the recovery of total proceeds from pooled residential mortgage loans is owed by a servicer of such pooled loans to the securitization vehicle for the benefit of all investors and holders of beneficial interests in the pooled loans, in the aggregate, and not to any individual party or group of parties; and

• (2) a servicer of pooled residential mortgage loans shall be deemed to be acting on behalf of the securitization vehicle in the best interest of all investors and holders of beneficial interests in the pooled loans, in the aggregate, if for a loan that is in payment default under the loan agreement or for which payment default is imminent or reasonably foreseeable, the loan servicer makes or causes to be made reasonable and documented efforts to implement a modification or workout plan or, if such efforts are unsuccessful or such plan would be infeasible, engages or causes to engage in other loss mitigation, including accepting a short payment or partial discharge of principal, or agreeing to a short sale of the property, to the extent that the servicer reasonably believes the modification or workout plan or other mitigation actions will maximize the net present value to be realized on the loan over that which would be realized through foreclosure.

(b) Safe Harbor- Absent contractual provisions to the contrary, a servicer of a residential mortgage loan that acts or causes to act in a manner consistent with the duty set forth in subsection (a), shall not be liable for entering into a qualified loan modification or workout plan, to–

• (1) any person, based on that person’s ownership of a residential mortgage loan or any interest in a pool of residential mortgage loans or in securities that distribute payments out of the principal, interest and other payments in loans on the pool;

• (2) any person who is obligated to make payments pursuant to a derivatives instrument determined in reference to any interest referred to in paragraph (1); or

• (3) any person that insures any loan or any interest referred to in paragraph (1) under any law or regulation of the United States or any law or regulation of any State or political subdivision of any State.

(c) Rule of Construction- No provision of this section shall be construed as limiting the ability of a servicer to enter into loan modifications or workout plans other than qualified loan modification or workout plans.

(d) Definitions- For purposes of this section, the following definitions shall apply:

• (1) QUALIFIED LOAN MODIFICATION OR WORKOUT PLAN- The term `qualified loan modification or workout plan’ means a modification or plan that–

• • (A) is scheduled to remain in place until the borrower sells or refinances the property, or for at least 5 years from the date of adoption of the plan, whichever is sooner;

• • (B) does not provide for a repayment schedule that results in an increase in the outstanding principal balance of the loan, including by deferred or unpaid interest, fees, or other charges; and

• • (C) does not require the borrower to pay additional points and fees.

• (2) RESIDENTIAL MORTGAGE LOAN DEFINED- The term `residential mortgage loan’ means a loan that is secured by a lien on an owner-occupied residential dwelling.

• (3) SECURITIZATION VEHICLE- The term `securitization vehicle’ means a trust, corporation, partnership, limited liability entity, special purpose entity, or other structure that–

• • (A) is the issuer, or is created by the issuer, of mortgage pass-through certificates, participation certificates, mortgage-backed securities, or other similar securities backed by a pool of assets that includes residential mortgage loans; and

• • (B) holds such loans.

(e) Effective Period- This section shall apply only with respect to qualified loan modification or workout plans initiated prior to January 1, 2011.

Here is how the Senators voted: