Here is a link to an article from Fox news that talks about the reduction of BK filings in 2011.  Does this signal an upturn in the economy?  In my opinion, no.  Only time will tell!

IT IS POSSIBLE TO CHALLENGE THE ALLEGED CREDITORS MOTION FOR RELIEF FROM THE AUTOMATIC STAY IN BANKRUPTCY COURT IN CALIFORNIA

Here is a copy of an email sent to us by the California Central District Bankruptcy Court after we defeated Chase in their motion to lift the automatic stay.

Motion for Relief from Automatic Stay Denied Chase

Based on the strength of the in re Veal case, and other arguments as to standing and real party in interest, the Court determined Chase could not present a colorable claim that they were the party entitled to enforce the note and the stay was not lifted.  If you are in a chapter 7, Chapter 11, or Chapter 13 bankruptcy and you have good faith reason to believe that based upon the attachments filed with the motion to lift the stay the alleged creditor cannot prove a colorable claim, you may want to investigate launching an opposition.  These lenders will try almost anything in Court and unless challenged, they will normally get their way.  Every debtor is entitled to the benefits of the automatic stay until a real creditor can come and lift the stay.  Kudos to the judge for applying the law and demanding proper legal proof.

For California lawyers assisting clients in this area, including bankruptcy attorneys, you can purchase a copy of our pleading at Foreclosure Warrior – Foreclosure Defense training and tools for lawyers.  When your purchase our opposition to the motion to lift the stay, you will get not only the motion, but you will get a 3 page guide sheet with a legal argument that can be made, and some other tips to handling the lift-stay case.

Here is a portion of what the guidesheet says (specifically as to the legal argument):

What to say at the hearing (some tips) 

The main thing to keep in mind is the judge may think your client wants the house for free.  You need to dispel this myth right off the bat.

(1)  Your honor, this is a case of real party in interest and standing.   The alleged creditor in this case cannot, and did not establish through their attachments to their pleading that they are the true creditor of the Debtor’s loan, and as such, they have not shown they are the real party in interest, or that they have legal standing to bring their motion.

(2)  This is not something that can just be taken for granted, and these are threshold issues in every federal court case, including in this bankruptcy court.

(3)  A Debtor is entitled to the benefits of the automatic stay in bankruptcy until, and unless some entity can establish a colorable claim that they own the loan at issue and are the secured creditor.

The rest of the argument to fight the motion for relief from automatic stay in bankruptcy court can be found at our Foreclosure Warrior Website.

On our Foreclosure Defense website we have provide a sample of what the memorandum of points and authorities to the opposition to the lift stay motion looks like.

You can hear more about this motion and the win against Chase on our real estate blog radio show.

ATTORNEY PLEADING TO FIGHT THE LIFTING OF THE BANKRUPTCY AUTOMATIC STAY ON STANDING AND REAL PARTY IN INTEREST GROUNDS

Here is one trick lenders and loan servicers like to do in bankruptcy court.  They file a proof of claim, or motion to lift the automatic stay and as proof that they are the “real party in interest” and have “standing” to make their filing, they present a copy of the note signed by the borrower in 1999.  The note is not endorsed and it is made payable to some lender that is no longer in business.  I think they assume that in 95% of cases no one is going to challenge them so they do not waste the time to attach real legal evidence that would satisfy not only the court, but the parties looking on.  It is a joke.  In one case, the lender actually argued to the judge (after we made a challenge to their proof of claim) “your honor, we forgot to attach the allonge.”  In another case I got “your honor, we accidentally printed out the wrong loan documents.”  Are you kidding me?  This is the kind of nonsense that gets pulled all the time.

At any rate, I have a sample pleading for lawyers who want to challenge the motion to lift the automatic stay (Chapter 7 or Chapter 13, etc.).  It is available on my Foreclosure Warrior Website (Intel from the Foreclosure Trenches).

What’s interesting is I have heard alot of bankruptcy lawyers will not file these motions.  They normally file only the underlying chapter 7 case, or chapter 13 case, and do not want to engage in the lift-stay litigation aspect.  At any rate, this pleading may help bankruptcy lawyers who want to make these challenges because they know the nonsense that is going on.

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California Lift Stay Opposition Motion and Memorandum of Points and Authorities (18 pages):  This pleading is “battle tested” in the Central District Bankruptcy Court in California.  Loan Servicer (Chase) motion to lift the automatic stay was DENIED.  This document has most of the major bankruptcy cases that deal with note ownership up to 2011.  In re Hwang; In re Weisband, In re Veal, in re Walker, etc.  The focus is on 9th circuit cases, but there are others as well.  This document will save you a TON of time in trying to get all the cases together and organize an opposition to a motion to lift the automatic stay.  The document flows nicely from real party in interest, to standing, to arguing about assigning a deed of trust without the note (all the major cases on that point of law are included).  Simply get your facts in there and you are ready to have a great motion.  (Click on the link to purchase the document).

Another bankruptcy filing by a major Corporation, this time the Los Angeles Dodgers (my favorite team as a kid).  Yes, it seems somewhere during the 7th inning stretch, the Dodgers need to file for Chapter 11 Bankruptcy protection in Delaware.  Here is a link to the story about the Dodgers filing for Bankruptcy on the Wall Street Journal website.  For consumer information about foreclosure and bankruptcy visit us at ForeclosureWarrior.com

SAAB seeks bankruptcy protection – Seems many different types of companies are seeking bankruptcy protection.  It is a sign of the time.  More information about foreclosure and bankruptcy issues can be found on our newly laumched ForeclosureWarrior website where he have video learning modules that can be reviewed upon becoming a member of the site.

There was an interesting case out of Oregon Bankruptcy Court.  The case is Monk v. LSI Title Company of Oregon (In re Monk), 2011 WL 212381 (Bankr. D. Ore. Jan. 21, 2011).

In this case a Debtor filed Chapter 13 bankruptcy.  The alleged mortgage creditor “PCFS Mortgage Company” filed a proof of claim.  The Chapter 13 Trustee was not satisfied that PCFS had a secured lien or perfected interest and therefore challenged the Proof of Claim.  PCFS failed to respond with any type of opposition and the lien was “disallowed” under Section 506(d) of the Bankruptcy Code.  This Section declares:

(d) To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void…….

The Chapter 13 debtor completed their Chapter 13 plan and a discharge was entered (no chapter 13 plan payments were made to PCFS).  The Discharge wiped out any debt that remained as it was unsecured debt.

However, after the Bankruptcy discharge, the successor in interest to PCFS Mortgage (Litton Loan) sought to enforce the debt and to foreclose on the property.  The debtor filed a motion to reopen the bankruptcy and filed an adversary proceeding to strip the lien, quiet title to the property and seeking an injunction to halt the foreclosure and for sanctions for the discharge violation (Litton should not be trying to collect on a debt that was previously discharged).

Litton responded and sought to dismiss the claims against them and dissolve the injunction.  The Court, for the most part, found for the Debtor and upheld the preliminary injunction and the action to strip the lien and quiet title, and for sanctions for discharge violation.  Apparently there was a loan modification agreement entered into after the Chapter 13 discharge.

Here is what Litton argued in trying to dismiss the case.

Here is some language from the holding in the case:

Because PCFS’s claim was “disallowed,” it was not an “allowed secured claim,” and the related lien was void pursuant to § 506(d). Defendant’s claim was not of the type described in § 506(d)(1), and its claim was disallowed for reasons other than its failure to file a proof of claim.

Thus, when the discharge order was entered in Debtors’ case, Defendant held a “disallowed” claim and a void lien.  Section 1328 provides in part:(a) As soon as practicable after completion by the debtor of all payments under the plan, unless the court approves a written waiver of discharge executed by the debtor after the order for relief under this chapter, the court shall grant the debtor a discharge of all debts provided for by the plan or disallowed under section 502 of this title, except any debts—(1) provided for under section 1322(b)(5) of this title.

__________

Defendant argues that Debtors did not file an amended Plan after disallowance of its claim and that the Plan continued to provide for ongoing payments to Defendant on the long-term debt and that the Plaintiffs did, in fact, continue to make the ongoing payments to PCFS even after the claim was disallowed.

It follows, argues Defendant, that the debt was not discharged under the exception at § 1328(a)(1).

Defendant’s argument fails for the following reason: The debt was disallowed under section 502 and, as provided by § 1328(a), it was discharged. A “debt” is defined at § 101(12) as “liability on a claim.” A “claim” is defined as a “right to payment ….“ § 101(5)(A). Once the claim was disallowed, PCFS no longer had a right to payment and thus no longer had a “claim” or a “debt.” As it no longer possessed a “debt,” it follows that it did not have a “debt [ ] provided for under section 1322(b)(5),” and cannot use § 1328(a)(1) to except its nonexistent debt from discharge.

This case shows the importance of objecting to proofs of claim in bankruptcy and demanding that the alleged creditor show its legal right to collect the alleged debt owed.  We can no longer take it for granted that the banks have dotted their i’s and crossed their t’s and that they are a secured lender just because they say so.  Proof of the claim is required.  To me, that is an endorsed note from the originator of the loan up to the securitized trustee who claims to own the note.   Interesting case for sure.

Yes, as we have talked about, the bad economy is hitting every business and now it is Realty Executives in Phoenix filing for Chapter 11 bankruptcy Protection.

You can read about the Realty Executives Chapter 11 Bk Filing here.

Many people file for chapter 7 bankruptcy protection.  One thing that happens when you are in bankruptcy is the creditors may seek to get you to “re-affirm” your debts with them.  For example, your car lender or credit card company may want to see if you are interested in “re-affirming” your debt.

You should realize, when you file for chapter 7 bankruptcy, you get to discharge your personal liability on most of your debt (for example, your credit cards, and your car).  This means, your creditors cannot come back at you personally if you fail to pay on the debt.  Now, if you are current on your home mortgage, you may want to consider “riding through” on your mortgage payment (which we have discussed on other blogs is basically refusing to re-affirm, but rather, just keeping current on your mortgage after the chapter 7 bankruptcy is discharged).  Now, people will ask, is the ride through possible on the car?  For the most part, the answer is no.  You will be required to re-affirm with your automobile lender if you file for chapter 7 bk, and your plan is to keep your vehicle.  However, in order to get the re-affirmation agreement approved, the judge (and your attorney) will have to sign off and confirm that such re-affirmation agreement is in your best interest.  If the car creditor is not offering any modifications, interest rate reductions, principle reductions etc., then re-affirming on the same terms may not be in your best interest.  So this is one thing to consider when you file for chapter 7 bankruptcy protection.

After the amendments to the bankruptcy code in 2005 (“BAPCA”), it became tougher for some people to qualify to file for bankruptcy protection.  The main reason why is there is a means test you have to be able to pass to qualify for chapter 7 (meaning you have to make less money than your state median income) and if not, you cannot file for a Chapter 7 bankruptcy absent compelling or special circumstances that overcome the “presumption of abuse” under the bankruptcy code.  So there are some instances when you make too much money for your household size, and you are forced to look to a chapter 13.

Now, a chapter 13 also has its qualification test.  Essentially, you must be a wage earner with at least a little disposable income that you can devote to a chapter 13 repayment plan for the benefit of your creditors.  Now one of the issues with qualifying for a Chapter 13 bankruptcy is that there is both a secured and unsecured debt cap (you exceed the caps and chapter 13 is not an option), which would then force you to look at the chapter 11 (very expensive for most people with retainers ranging from 10-50k and more).

As of this writing, the current debt limits to qualify for chapter 13 bk are as follows:

(1) Maximum amount of unsecured debt you can have is $360,475 (ex. credit cards and other unsecured debt)

(2) Maximum amount of secured debt is $1,081,400 (ex. liens on your property)

These are things to think about as you move toward making a decision on whether or not filing for bankruptcy is right for you.  Some people will start our in one chapter and then convert to another.

Citing too much competition from online retailers, Broders books is the latest to file for Chapter 11 Bankruptcy protection.  Why aren’t they too big to fail?  Where is their bailout?  Guess only having about 600 retail shops is not enough to get congress off their pens.

You can read about the Borders Chapter 11 Filing here.  Just another sign of the times.