Hi Carole, I wish I had some time to go over it and help you. Not that I know much about BK. I'm SLAMMED, what with the market acting the way it is. You are turning this thread into a treasure. Keep up the good work.
I noticed while reading that creditors will be required to work with credit counseling services. This may change the ccs for the better. As of right now. Very few Creditors work with ccs agencies successfully. Some even refuse to. That is the only good thing I see in this new law so far. I also noticed that the asset valuations are not at "garage sale" value anymore. But replacement value. Is the trustee going to be happy with all the furniture and stereo equipment he is to be stuck with. I hope they understand most furniture and stereo/video/computer equipment is worthless 6 months after leaving the store. And what will they do with a chapter 13 filer with NO disposable income. But a salary better than the median income for the area? Pay 1 penny a month till his income gets better? Who wrote this. And are they living in the same world we are?
A couple of more provisions before I hit the hay...and thanx guys for the comments as I was gettin' kinda' lonesome on this thread! 1. (Sec. 103) Expresses the sense of Congress that the Secretary of the Treasury has the authority to alter Internal Revenue Service (IRS) standards established to set guidelines for repayment plans as needed to accommodate their use under the Bankruptcy Code. Instructs the Director of the Executive Office for U.S. Trustees to report to certain congressional committees regarding the utilization of Internal Revenue standards for determining specified monthly expenses of a debtor and the impact of such standards upon debtors and the bankruptcy courts. This provision expresses or states that the bk court use the IRS's standards to determine housing, food, car, miscellaneous et al to determine your expenses. Right now there are no standards...this will make things like private school tuition for your kids a non-allowable expense. Right now it is left to the discretion of the bk trustee...the irs standards are more stringent. It will be very limiting to chapter 7 filers if they have an income of more than 3K a month. 2. (Sec. 105) Instructs the Director of the Executive Office for U.S. Trustees to: (1) develop a financial management training curriculum and materials to educate individual debtors on how to better manage their finances; and (2) test, evaluate, and report to Congress on the curriculum's effectiveness. (Sec. 106) Precludes an individual debtor from filing under Federal bankruptcy law unless the individual has received a briefing from an approved nonprofit budget and credit counseling service prior to filing a bankruptcy petition, unless the U.S. trustee or bankruptcy administrator determines that the service for the district in which the debtor lives is not reasonably able to provide adequate services to the additional individuals who would otherwise seek credit counseling because of such requirement. These provisions are pretty much self explanatory. My advice to the credit repair gurus here is to open a credit counselling business and reap the future rewards of these provisions! Just a thought... Will be back tomorrow...this thread should take me a couple of weeks at this rate...but will ensure that the creditnet crowd is ahead of the pack! clc
srhng- Here is the provision you alluded to in your post: (Sec. 326) Declares that the value of personal property securing an allowed claim shall be determined based on its replacement value as of the date of petition filing without deduction for costs of sale or marketing. This provision has more to do with valuating the bk estate than with the trustee getting old tvs, fridges and couches. It has more to do with raising your assets above the exemtion amounts which is important in a chapter 13. It is basically eliminating the "cram down" feature of the chapter 13. I gave a good example of a cram down in another earlier post on this thread...but for purposes of clarity I will give another...you have a refrigerator from Sears. You charged $1K to buy it. At the time of filing for bk the balance is $800 but the garage sale value is only $300. Right now in a 13 you could "cram down" Sears to $300 which ultimately saves you $500. In the new bk law if you're upside down in any money purchase good...you stay upside down. This provision will take one of the best features of a 13 and abolish it. Hope this answers your question...and "no" they don't live in our world they live in the world of beltway lobbyists who pay their way to luxurious golf resorts...and get their homes refied for 5X its value. That is why I am sure that this bill will not pass into law until after the nov. elections...so watch the politicking as the abortion clinic protestors provision was put in as a "red" herring...after the elections just watch how the mud is slinged with this bill! will add more manana...buenos noches! clc
I'm going to <bump> this and fall heavily into the arms of morpheus (and no that is NOT my dh's name as I have no dh...lol) Maybe my friendly daytime creditnetters can help out or ask questions in regard to the new laws. cya' tomorrow, clc
John, Try and copy and paste the site. For some reason it times out as a link. The page I am citing is the latest revision of four so that is why I wanted to post that particular page. Hope it works for you trying that as I would love the help on this thread. thomas.loc.gov/cgi-bin/bdquery/z?d107:HR00333@@D&summ2=3& Thanx...I'm off to work will check in later to add to this thread. clc
I just wanted to say Thank You CLC. I'm reading the thread every day and even though I read the changes, to be honest, your explanations are whats helping me to better understand. I filed last year, but I'm still curious as to what the changes are going to be once this is said and done. I appreciate your time in working on this thread very much. Newstdt
Here is tonight's latest edition...btw thanks newstdt...what began as an interesting topic has become a labour of love (translation clc needs to get a life...hardyharhar) I really am enjoying dissecting the bk reform act as I learn a little more each day myself. Before I head out to my lsat prep class I want to explain Title I...which is the beginning paragraph of the new bk reform act. Read it below: Bankruptcy Reform Act of 2001 - Title I: Needs-Based Bankruptcy - Amends Federal bankruptcy law to revamp guidelines governing dismissal or conversion of a Chapter 7 liquidation petition (complete relief in bankruptcy) to one under Chapter 11 (Reorganization) or Chapter 13 (Adjustment of Debts of an Individual with Regular Income). Allows a bankruptcy panel trustee and any party in interest to move for such dismissal or conversion (current law prohibits a party in interest from such motions). Lowers the "substantial abuse" standard for dismissal or conversion to one of simple abuse. Replaces the presumption in favor of granting the relief sought by the debtor with a presumption that abuse exists if the debtor's current monthly income exceeds an amount determined according to specified formulae. The drafters of this act make clear in this paragraph what their intent is...no more chapter 7 bankruptcies unless you do not meet the monthly income determined according to specified formulae (WTF does that mean you might ask?) Well they haven't decided the "formulae yet" but they refer to the IRS formulae further into the act. If you have ever seen the IRS guidelines broken down by state & county (and I have that site bookmarked somewhere and later tonight I will post it) you will see that the housing, food et al guidelines are pretty chintzy. Not too far above the poverty level in many places. The other relevant fact in this paragraph is "substantial abuse" versus "simple abuse". while it sounds legalese it pretty much means what it says. The standard for proving abuse is notched down to even the minimal abuse will be considered "abuse" and in turn your bk will be converted to a 13 or 11 (don't worry about 11s...individuals can file 11s if their debt exceeds the maximum allowed under a 13...this is for another day ;=}). The simple test will be if your monthly income exceeds their mysterious formulae. The other pertinent statement in this paragraph is that not only can a bk panel trustee move to convert your 7 to a 13 but also ANY interested party. This means that your friendly cc company can move to convert your 7 if they find "simple" abuse. This will make the 341a creditors meeting alot more well attended than it is today. Those creditors will be there to pounce on your schedules. Further in the act the documents of proof required will be alot more stringent. No more 5 minute meetings and out the door. In our lunchtime legalbeagle discussion today there certainly was agreement that bk 7s are going to suffer the same fate as our friendly tyrannosaurus rex...extinction. Well I'm off to my brain bruising lsat prep class. Will post tonight the site for the irs standards and the provisions having to do with the documentation required to prove your "needs based bk". Cya' later, clc
Dear CLC, From what I do know about BK (mostly BK13) each creditor must file a "proof of claim" to the court to substantiate the fact that the debtor owes him money. But suppose the debtor objects to the debt. What kind of proof does the court want to see with regard to the legitimacy of the debt. If the debtors atty. files an objection to a creditors proof of claim there is obviously now a dispute. My next door neighbor works for the BK court but she's in a clerical position and doesn't really know the answer to this. But here is what she said: In the courts haste to reduce all the paperwork the court will accept the word of the Creditors atty. that the debt is valid unless there is a dispute. At that point the creditors atty. is REQUIRED by BK law to see certain items of documentation pertaining to the debts legitimacy BEFORE they can reassert their proof of claim. I would guess that one of those documents is the original contract. Also I would guess that a complete readout of every transaction on the account would be required too. If the debtor's atty. reasserts his proof of claim without substantiating the debts legitimacy he could be sanctioned severely. But here's the ultimate question: Where in the law is this so stated? Here's why I'm asking: Suppose we could put in our validation demand something like the following: "According to bankruptcy law a debt must be substantiated by a review of the original signed contract and a complete readout of the transactions including interest charges, fees, etc., etc., as per section 1234 of the Bankruptcy law. I hereby demand no less proof of your claim that I owe you money than would be demanded by the court in a BK proceeding. This would be very powerful for the following 2 main reasons. It demands real proof of the CA's claim with law other than FDCPA It allows us to subtly drop the big bad BK word in such a way that it doesn't look like a ploy, which the CA's seem to ignore We badly need to revamp our letter library and I think this would be very powerful. We just need to find the actual law and section where this is covered in the BK law. Thanx for all your hard work. BTW - I know it feels lonely working so hard on this thread but remember it will be memorialized for all time, and I bet referred to frequently once the BK revision gets passed.
Butch, Here's the problem with that logic. A debtor is the one who initiates a bk filing be it a 7 or, a 13. The debtor is required to list all of their creditors. The trustee informs the creditors that a debtor has listed them in a bk petition. And, it goes from there. Point is, the debtor tells the court upfront who they owe money and then, the creditors can challenge the filing if they desire. The creditor has to prove nothing as far as the existence of a debt. The debtor did it for them.
Hey Butch! I was waiting until your research curiosity got the best of you! The elements of a proof of claim are found here 11 USC Section 502. Here is the site: http://www4.law.cornell.edu/uscode/11/502.html Here is the crux of the situation...if a creditor is unsecured which are the creditors you would send validations to right? Well they fall into the lowest class of claims. They never get paid in full and lucky to get anything at all. So it behooves the debtor to make sure that the proof of claim encompasses all the debt including any fees or interest...because the debtor wants to get rid of it and the debtor wants to make sure that the creditor can't come back at a later date and say "you didn't include this in you bk so now pay up!" So as keepmine indicated the proverbial shoe is now on the other foot. The general unsecured creditors rarely file a proof of claim anyway (no claim the debt is immediately discharged)...as why bother?? As for threatening bk to a ca creditor...this is in my opinion not a smart move especially if you own property as liens survive bk. If a lienholder is not paid through the bk estate he can come back at a later time (like when you sell the house) and collect his lien as the new purchaser would not be able to get clear title until the lien was satisfied. My theory re:threatening bk is sorta' like my theory about disciplining kids...why threaten to smack them if you know you're not (as least I couldn't...until they were obnoxious teens that is) and if you are why threaten...just smack 'em. Empty threats are easily uncovered so why let them know what your strategy is even if it is bk. That is my opinion mind you...tomorrow I will discuss it at lunch with my legalbeagle group and I'll get back to you with the consensus. I was going to post the IRS allowances so everyone could go to the site and see what they would have to live on if/when the bk reform bill passes. But I can't find it...maybe it's because my eyes are all blurry from staying up way past my bedtime last nite...lol. I will for sure find them tomorrow as I think it is important for everyone to see what the govvies expect you to live on in a chapter 13 plan. Good night,Mr. Sun Good night, Mr. Moon cya' in the manana clc
Well SHUX, lol. I thought mentioning the BK word might induce them to settle for less. Anyway, I'll keep looking for another angle, as always.
Here is the site I promised. It is from the IRS collections site. This is the "formulae" that the bk reform act is considering to adopt. It would be interesting for all interested to take a look at it and see if YOU and YOUR family could live on what these numbers allow. http://www.irs.gov/newsroom/display/0,,i1=42&genericId=13386,00.html This bk reform act is going to seriously affect the credit consuming public...I am going to post a warning on the board in a separate thread...every consumer who has or is seeking to have credit should know what will happen if something dire happens to them. BK will not be the option it is today. So be prepared! clc
In another thread a question indirectly referred to documentation required for a 7 & 13 filer. Here are the provisions: Expands debtor's duties to require filing with the bankruptcy court of: (1) Federal tax returns; (2) evidence of employer payments received; (3) monthly net income projections; and (4) anticipated income or expenditure increases. Permits a Chapter 7 or chapter 13 creditor to request the debtor's petition, schedules, and statement of affairs, including the debt adjustment plan filed by the debtor. Requires dismissal of a Chapter 7 or 13 case upon debtor's failure to provide to the bankruptcy trustee not later than seven days before the date first set for the first meeting of creditors a tax return for the latest taxable period prior to filing. Mandates that, at the time of filing with the taxing authority, a Chapter 7 or 13 debtor file with the bankruptcy court specified tax documentation pertaining to the period from case commencement until case termination. Requires a Chapter 13 debtor to file with the court a statement of income and expenditures in the preceding tax year, and monthly net income, showing how calculated. Makes debtor's mandatory documentation available for inspection and copying to certain bankruptcy officers and any party in interest. Requires debtors to furnish driver's license, passport, or other photograph-containing documentation establishing debtor identification. (Sec. 316) Provides for automatic dismissal if a Chapter 7 or 13 debtor fails within 45 days of filing a petition to furnish all mandatory information, or fails to timely file the requisite schedules. Requires the court to order dismissal within five days of a request by a party in interest for debtor's failure to timely submit requisite documentation. These provisions are self explanatory. But DO NOTE your creditors can request and you MUST supply this information to them. Also notice reference to "future" income. This means if you are out of work at time of filing but know you will be getting a new job later...you will have to dislcose. These provisions also provide for the reporting of income throughout the 13 plan. Gone will be the days of the bk trustee not caring about your income after the 13 plan is confirmed. clc
Someone I respect very much due to his credit repair advice on another forum asked me a questionre:states' exemptions and federal exemptions as it related to the new bk reform act. Here is my answer reprinted with my expressed permission: WhyChat!!!!, Did you enjoy your vacation???? In answer to your question bankruptcy laws are federal there are no state bk laws. I am sure you are referring to the state exemptions versus the federal exemptions. So assuming that my answer is that the bk reform act is effectively taking the oomph out of the states' who have liberal exemptions such as Florida and Texas homestead exemptions. One of the ways there are doing this is by increasing the residency requirements from 91 days to 366 days. Another is outlined in the following provision: Sec. 303) Directs the court to grant two-year relief from the automatic stay upon request of a party in interest with respect to certain real property actions if the court finds that filing the bankruptcy petition was part of a scheme to delay, hinder, and defraud creditors. which basically states if you go to Florida or Texas and buy a property just to avoid paying your creditors you will not get an automatic stay. There is one more that has to do with capping the increased value of a property over a 2 year period to $125K. Most of the rest of the states have less generous exemptions than the federal exemptions and some of those states have an "opt out" clause which means you can choose between the federal or state exemptions. I hope this answers your question as you have answered so many of mine in another forum! clc PS keeping this on page one is liking treading water fully clothed! I hope its not because it is boring as I'm trying to relate it to the average consumer...questions, comments anyone?
On another thread there was a comment made that the "only" changes to the present bk laws is that the time between filing 7s will go from 6 to 8 years. I begged to differ with that poster and in answer to it I am posting the provision that deals with that particular subject on this thread: (Sec. 312) Extends the period between Chapter 7 discharges from six to eight years. Denies a chapter 13 discharge to any debtor who has received a discharge: (1) in a chapter 7, 11, or 12 case within the preceding three years; or (2) in another chapter 13 case within the preceding two years (or shorter time if the court finds extreme hardship). As I discussed in an earlier post on this thread no longer will Chapter 20s be possible. A 20 is when a debtor files a 7 and gets some debts discharged but not all as those debts were not dischargeable. the debtor after the 7 discharge immediately files a 13 to force his remaining creditors into a payment plan. Also taking advantage of the "cram down" feature of the 13 (have explained this twice already) and the forced payment plan to any IRS debt that was a priority claim (13s being alot nicer installment plans than what the irs offers). 13s will no longer be legal to file serially as they can be today. Usually the local courts like to see 180 days but the code doesn't specify a 180 day period so it is possible to file one 13 after another. With reform you will have to wait 3 years after a 7 discharge and 2 years after a 13 discharge (which really computes to 5 years as a 13 plan takes at the minimum 3 years to complete and sometimes 5). Since most of the people on this board who filed bk were 7 filers and not 13 filers there is less info on 13s here than on 7s. since 7s will be close to impossible to do with these reforms I heartedly advise everyone to familiarize yourself with the 13 bk laws. As I have stated in another thread I am not advocating fiscal irresponsibility here...just fiscal strategy. One never knows when and how one's life gets upheaved. Knowing your options is somewhat like car insurance...you don't buy car insurance to get in an accident...you buy it just IN CASE you do! So consider this knowledge re:bk credit insurance as in a way it is exactly that. clc
A question was posed on another thread re:creditor's rights under the new laws. by far this was the main reason for bk reform. Who do you think has lobbied the longest and hardest for this law....now I hope that is an easy guess....of course, cc ompanies. So imagine how much power they are going to have. Here are some provisions just to enlighten you: (Sec. 309) Revamps prescriptions governing the effects of conversion from chapter 13 to another chapter. Declares that: (1) valuations of property and of allowed secured claims in a chapter 13 case shall not apply in a case converted to chapter 7; and (2) with respect to cases converted from Chapter 13, the claim of any creditor holding security as of the date of the petition shall continue to be secured by that security unless the full claim amount, as determined under applicable nonbankruptcy law, has been paid in full as of the conversion date. States that a prebankruptcy default shall have the effect given under applicable nonbankruptcy law unless it has been fully cured pursuant to the plan at the time of conversion. Provides for a Chapter 7 debtor's assumption of unexpired leases of personal property. Declares that in a Chapter 11 case in which the debtor is an individual, and in a Chapter 13 case, if the lease is not assumed in the plan, it is rejected (thus no longer subject to an automatic stay) as of the conclusion of the hearing on confirmation. Delineates a cash payment plan for chapter 13 debtors for payments to any lessor of personal property and to any creditor holding a claim secured by personal property in order to ensure adequate protection to the claim holder during the payment period. Requires a debtor-in-possession to provide reasonable evidence of any requisite insurance coverage with respect to the use or ownership of such property. (Sec. 310) Reduces the threshold consumer debt amounts of luxury goods (from $1,075 to $750) and consumer credit (from $1,075 to $750) owed to a single creditor which are presumed nondischargeable in bankruptcy if acquired within 90 days and 70 days, respectively, (currently 60 days for either category) before an order for relief is issued. (Sec. 311) Denies an automatic stay of any eviction, unlawful detainer action, or similar proceeding by a lessor in specified circumstances against a debtor involving residential real property with respect to which: (1) the debtor tenant has failed to pay rent, and a lawful new tenant is ready to take possession; (2) the debtor has commenced another bankruptcy case within the year preceding the filing of the petition for relief; or (3) eviction actions are based upon endangerment to property or person or the use of illegal drugs. Specifies circumstances in which such an exception to an automatic stay shall not become effective. As I am running short on time I will return later to explain what these provisions say in layman's terms. Until then, clc
