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6/2/09

Bankruptcy: Mortgage Meltdown Melodrama at Attorney Seminar

Mortgage Meltdown Melodrama – Tied to the Railroad Track:  A Story of Villains, Heroes, and Happy Endings will be featured at the 20th annual conference of the Kansas Women Attorneys Association in Lindsborg in July.

Kansas Chief Bankruptcy Judge Robert Nugent, Chapter 13 Standing Bankruptcy Trustee Laurie Williams and Chapter 7 Interim Trustees Patricia Hamilton and Jill Olsen will present the continuing legal education in bankruptcy.

Pulitzer prize winning columnist Ellen Goodman of the Washington Post is the keynote address speaker.

More information about the Lindsborg conference may be found on the KWAA website.

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Filed Under: Mortgages
3/10/09

What Interest Rate Does the Chapter 13 Bankruptcy Trustee Pay on Secured Claims?

EXPLANATION OF THE TOPEKA DISCOUNT RATE

by Jan Hamilton, Standing Chapter 13 Trustee

  • The Discount Rate (Interest Rate) for chapter 13 bankruptcy cases filed in Topeka, Kansas, on or after March 1, 2009, is 4.75%.

This rate will typically be changed no more than once a month, on the beginning of the
month.

Beginning on July 1, 2004, we began using our version of the Till rate. [Till v SCS Credit Corporation, 541 U.S. 465, 124 S. Ct. 1951 (2004)]. We start with the Wall Street Journal Prime as reported by www.bankrate.com. We will adjust prime for new cases filed once per month on the 1st day of each month. We then add 1.5% to that rate as the risk factor. This rate has never been challenged but certainly, in the appropriate case, the risk factor might be higher or lower.

This rate was approved by Judge Karlin in In re Lowder, Case No. 05-44802, in a decision entered on August 14, 2006.Continue Reading

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Filed Under: Chapter 13, Financial Help, Foreclosure, Mortgages, Vehicles
3/9/09

Call Kansas Senators to Support Judicial Mortgage Modification in Bankruptcy

Judicial modification of residential mortgages in chapter 13 bankruptcy is part of H.R. 1106, which passed in the U.S. House of Representatives last week.  The bill now moves to the U.S. Senate and may come up for a vote this week.  We need your help to get the bill passed into law.  Call your Kansas senators and tell them you support judicial modification of home mortgages in bankruptcy.

The bill is designed to stop the home foreclosure crisis and prevent people from losing their homes to mortgage foreclosure.  Using judicial modification in chapter 13 bankruptcy, the loan could be restructured by writing the principal down to the value of the home, fixing the interest rate at a reduced rate and extending the loan to 40 years.  Judicial modification will not save all homes, but will help Kansans who have been victimized by predatory lending.  It will give individual homeowners the same benefits corporations have in chapter 11 bankruptcy. The law change is necessary because lenders are not making voluntary loan modifications.  People who don’t file bankruptcy will be helped by the bill also.

You can help pass this legislation by calling or faxing your Kansas Senators today.  Tell the person who answers you support judicial modification of home mortgages in bankruptcy.  Sen. Sam Brownback,  (202) 224-6521, fax (202) 228-1265, and Sen. Pat Roberts, (202) 224-4774, fax (202) 224-3514.

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Filed Under: Foreclosure, Kansas Bankruptcy News, Mortgages
3/8/09

Do I Have to Pay Income Tax on Forgiven Mortgage Debt?

Mortgage Debt Forgiveness, IRS Tax Tips, March 5, 2009 –TT-2009-44

Here is a tax tip from the Internal Revenue Service about mortgage debt forgiveness:

If your mortgage debt is partly or entirely forgiven during tax years 2007 –2012, you may be able to claim special tax relief and exclude the debt forgiveness income.

Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence. The limit is $1 million for a married person filing a separate return.

Taxpayers may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure. To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.

However, proceeds of refinanced debt used for other purposes (for example, to pay off credit card debt) do not qualify for the exclusion.

If you qualify, you claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, Continue Reading

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Filed Under: Mortgages
3/8/09

Do Mortgage Arrears Get Paid Interest in Chapter 13 Bankruptcy?

DOES THE MORTGAGE CREDITOR GET INTEREST ON THE ARREARAGE PAID IN THE PLAN?

By Jan Hamilton, Standing Chapter 13 Trustee

Frequently, arrearages on real estate mortgages are paid through the plan. Do they bear interest or not? If they do, at what rate?

While Judge Somers has (essentially on behalf of all of the judges in Kansas), ruled on certain language in plans relating to mortgages, (In re Seal, Case No 05-17262, order entered March 6, 2007), the decision leaves open the question of whether interest is to be paid and at what rate.

Section 1322(e) was enacted as part of the Bankruptcy Reform Act of 1994 to overrule the Supreme Court decision in Rake v. Wade, 508 U.S. 464, (1993).Continue Reading

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Filed Under: Chapter 13, Financial Help, Foreclosure, Mortgages
2/23/09

Judicial Modification of Mortgages in Bankruptcy to House Floor Wednesday

Judicial mortgage modification in chapter 13 bankruptcy is expected to be considered on the floor of the U.S. House of Representatives as early as Wednesday of this week.   The proposed law eliminates the ban on restructuring primary residential mortgages to help people save their homes from foreclosure.  The law change will help people in foreclosure who don’t want to file bankruptcy also,  Chip Parker, Jacksonville bankruptcy lawyer, writes in the Bankruptcy Law Network blog.

The bill will be part of a large package of financial services legislation.  You can support judicial modification of mortgages in chapter 13 bankruptcy by calling or faxing your Kansas Congressional delegation today.  Here is how to contact your member of Congress:

  • Sen. Sam Brownback,  (202) 224-6521, fax (202) 228-1265
  • Rep. Jerry Moran,  (202) 225-2715, fax (202) 225-5124 
  • Rep. Lynn Jenkins, (202) 225-6601, fax (202) 225-7986
  • Rep. Dennis Moore, (202) 225-2865, fax (202) 225-2807
  • Rep. Todd Tiahrt, (202) 225-6216, fax (202) 225-3489
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Filed Under: Chapter 13, Foreclosure, Mortgages
2/17/09

Do I Have to Reaffirm Car Loans, Home Mortgages?

If you are behind on a car loan or a home mortgage and you can afford to catch up, you can reaffirm and possibly keep your car or home.  If the lender agrees to give you the time you need to get caught up on a default, this may be a good reason to reaffirm.  But if you were having trouble staying current with your payments before bankruptcy and your situation has not improved, reaffirmation may be a mistake.  The collateral is likely to be repossessed or foreclosed anyway after bankruptcy, because your obligation to make payments continues.  If you have reaffirmed, you could then be required to pay the difference between what the collateral is sold for and what you owe.

If you are up to date on your loan, you may not need to reaffirm to keep your car or home.  Some lenders will let you keep your property without signing a reaffirmation as long as you continue to make your payments.  Sometimes lenders will do so if they think the bankruptcy court will not approve the reaffirmation agreement.

Source: Your Legal Rights During and After Bankruptcy:  Making the Most of Your Bankruptcy Discharge Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

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Filed Under: Discharge, Mortgages, Trustees, Vehicles
2/16/09

Do I Have Other Options for Secured Debts Other than Reaffirmation?

You may be able to keep the collateral on a secured debt by paying the creditor in a lump sum the amount the item is worth rather than what you owe on the loan.  This is your right under the bankruptcy law to “redeem” the collateral.

Redeeming collateral can save you hundreds of dollars.  Because furniture, appliances, and other household goods go down in value quickly once they are used, you may redeem them for less than their original cost or what you owe on the account.

You may have another option if the creditor did not loan you the money to buy the collateral, like when a creditor takes a lien on household goods you already have.  You may be able to ask the court to “avoid” this kind of lien. This will make the debt unsecured.

Source: Your Legal Rights During and After Bankruptcy:  Making the Most of Your Bankruptcy Discharge Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

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Filed Under: Discharge, Exemptions & What You Get to Keep, Mortgages, Vehicles
2/15/09

Should I Reaffirm a Debt?

If you are thinking about reaffirming, the first question should always be whether you can afford the monthly payments.  Reaffirming any debt means that you are agreeing to make the payments every month, and to face the consequences if you don’t.  The reaffirmation agreement must include information about your income and expenses and your signed statement that you can afford the payments.

If you have any doubts whether you can afford the payments, do not reaffirm.  Caution is always a good idea when you are giving up your right to have a debt canceled.

Before reaffirming, always consider your other options.  For example, instead of reaffirming a car loan you can’t afford, can you get by with a less costly used car for a while?

Source: Your Legal Rights During and After Bankruptcy:  Making the Most of Your Bankruptcy Discharge Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

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Filed Under: Discharge, Mortgages, Vehicles
2/14/09

Do I Have to Reaffirm the Same Terms?

No.  A reaffirmation is a new contract between you and the lender.  You should try to get the creditor to agree to better terms such as a lower monthly payment or interest rate.  You can also try to negotiate a reduction in the amount you owe.  The lender may refuse but it is always worth a try.  The lender must give you disclosures on the reaffirmation agreement about the original credit terms, and any new terms you and the lender agree on must also be listed.

Source: Your Legal Rights During and After Bankruptcy:  Making the Most of Your Bankruptcy Discharge Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

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Filed Under: Discharge, Mortgages, Vehicles
2/13/09

Lenders Halt Foreclosures Three Weeks

JP Morgan Chase & Co., Citigroup Inc., Morgan Stanley and Fannie Mae have announced they are halting home foreclosures until March 6, 2009, while the Obama administration develops its policy for helping the U.S. housing market.

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Filed Under: Foreclosure, Mortgages
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