For many people experiencing financial difficulties, a mortgage forbearance could be a useful tool in coping with mounting monthly bills. When your mortgage lender allows you to pay less than you owe or suspends your monthly payments altogether, it frees up funds for other bills. However, if your lender denies your application for a mortgage […] The post Should You File For Bankruptcy if Denied a Mortgage Forbearance? appeared first on .

The different sections of the Bankruptcy Code should all work together for a common purpose. Sometimes a situation arises which looks like a disconnect. I had this happen in a dischargeability case I am defending. The creditor filed an action under Section 523, based on a suit pending in another state, and asked to have the stay lifted to allow the case to go forward. While the motion was pending, the debtor received his general discharge. The court asked the parties to address the impact of Section 362(c)(2)(C), which states that the automatic stay for an individual in Chapter 7 terminates upon entry of the general discharge.   By way of background, Section 523 provides that the discharge under Section 727 “does not discharge an individual from any debt” covered by the next nineteen subsections. In the case of an individual debtor, the automatic stay under Section 362(a) operates like a preliminary injunction, enjoining suits against the debtor pending entry of the discharge. The discharge acts like a permanent injunction and bars the pursuit of actions against the discharge. With respect to lawsuits and collection actions, the protection of the discharge takes over from the automatic stay. In theory, the transition should be seamless. However, what happens in the situation where the stay has expired under Section 362(c)(2)(C), but the debt has not been determined to be dischargeable or non-dischargeable? The problem, as it first appeared to me, was that if the stay terminated due to the discharge and the debt had not been discharged, didn’t that leave the creditor free to continue the litigation? My solution was to say that when the debt has not been determined to be dischargeable or not, the discharge had not taken effect as to that debt and therefore that Section 362(c)(2)(C) did not apply. The judge had a different analysis, although it essentially arrived at the same result. The Court ruled that entry of the discharge did in fact terminate the stay, rendering the motion to lift stay moot. However, the discharge took over at that point. Section 524(a)(2) states that the discharge “operates as an injunction against the commencement or continuation, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor….” Thus, the court found that even though dischargeability had not yet been determined, the discharge blocked pursuit of the state court action. The court further ruled that if the creditor wanted to continue in the state court forum, it could ask the bankruptcy court to abstain in favor of the state court action. The court’s solution reconciles Sections 362(c)(2)(C), 523(a) and 524(a)(2). The discharge is the discharge. Thus, for an individual in a chapter 7 case, entry of the discharge terminates the stay. However, the automatic stay is replaced by the injunction of Section 524(a)(2). If the debt is later found to be nondischargeable, then Section 523(a) excludes it from operation of the discharge. That being said, during that period when the debt is neither dischargeable nor nondischargeable, the discharge applies. The problem that I had in my thinking was that I assumed that the discharge did not take effect until the debt was found to be dischargeable. However, the opposite is true. The debt is not excluded from the discharge until the court so finds. The problem is more difficult for debts that are automatically deemed nondischargeable. Recently I wrote that certain educational loans did not fall within the language of Section 523(a)(8). Thus, these debts would be immediately discharged. However, if the debtor misunderstands the nature of the debt and it really is nondischargeable, then the discharge would never take effect. For these automatically nondischargeable debts, there is a binary outcome. Either the discharge applies immediately, or it is excluded from discharge immediately. Despite this certainty, there may be ambiguity as to whether the discharge applies or not. This leads to the possibility that a creditor may be violating the discharge, even if it has a good faith belief that the discharge does not apply.  In this case, a prudent creditor will stop trying to collect and seek a determination that the discharge does not apply. However, in far too many cases, I see the creditor continue trying to collect until the court finds the debt to be subject to the discharge. At that point, the discharge has clearly been violated and there may be consequences for the creditor.

When someone feels overwhelmed with credit card debt, they will often turn to creative solutions other than bankruptcy to address the problem. One common tactic is to consolidate the debt into one payment. This could be accomplished in different ways, including employing a debt consolidation agency or applying for a consolidation loan. Each of these […] The post How Does Debt Consolidation Work? appeared first on .

Are you getting your mortgage statements after filing bankruptcy? Some mortgage companies use bankruptcy as an excuse to stop sending mortgage statements. (Or they send them to your lawyer, not to you.) The law is completely clear. The law says to keep sending them to you.  That law is Regulation Z. The Consumer Finance Protection […] The post Getting Your Mortgage Statements After Bankruptcy by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.

The decision to file for bankruptcy is one that may take a lot of time and thought.  It often comes at a very difficult time in one’s life.  The stress and uncertainty about the anticipated results as well as the fear of what the future will look like only adds to the difficulty.  Without the+ Read More The post Finding a Trustworthy Bankruptcy Attorney in Illinois appeared first on David M. Siegel.

   Judge Specie in Pensacola, Florida sanctioned counsel for a creditor in a Subchapter V chapter 11 case for submitting a written order on the request of a state court judge substituting their client for the debtor in a pending lawsuit.  The background was a stipulated deficiency judgment against the debtor by NWE165, LLC in the amount of $300,000, which judgment was then assigned to 4 Dakota.  Subsequent to that judgement, debtor sued Schwizer for over $1.5 million asserting a failure to perform under a purchase and sale agreement.  On 15 January 2021 the district court entered an order of execution assigning to 4 Dakota all of debtor's  right, title and interest in and to the Schwizer lawsuit.  This order provided that it would operate as a full and complete assignment giving 4 Dakota standing to seek substitution as the plaintiff in such lawsuit.  4 Dakota filed the substitution motion on 20 January 2021, and the state court held a hearing on the motion on 5 March 2021, taking the matter under advisement.  On 7 March 2021 the debtor filed for relief under chapter 11, listing 4 Dakota as a creditor, and filed a suggestion of bankruptcy in the Schwizer lawsuit.  On 18 April the judicial assistant to the state court judge emailed counsel requesting an order granting the motion to substitute counsel.  Counsel for 4 Dakota submitted a proposed order on 23 April, which was signed on 27 April at 1:08pm.  At 1:30 p.m. Debtor's counsel objected to the substitution order by calling and emailing the state judge, noting their opinion that the order violated the bankruptcy automatic stay.  4Dakota's attorneys immediately filed a reply disagreeing that the order violated the stay, rather being a ministerial act related to a prepetition hearing.  Debtors filed for sanctions on 29 April. Judge Specie held a hearing on 4 May finding that the substitution order was void ab initio, given the debtor's bankruptcy estate's interest in the Schwizer lawsuit.  Further, that the submission of the substitution order was an act to obtain or exercise control over the lawsuit in violation of 11 U.S.C. 523(a)(3).  Debtor filed a motion to vacate the substitution order which 4 Dakota responded to on 11 May, which response did not mention the court's ruling from May 4.  Judge Specie noted the underlying regime for sanctions for violation of the automatic stay.  11 U.S.C. §362 prohibits the enforcement of a prepetition judgment against the debtor or its property, and any act to obtain possession or control over such property.  While 11 U.S.C. 362(b) sets for certain exceptions to the automatic stay, unless the action falls into one of the exceptions or the party obtains relief from the stay, the code requires that an individual injured by any willful violation of a stay shall recover actual damages, including costs and attorney fees, and in appropriate circumstances, punitive damages.  The test on whether a violation is willful is whether the offending party 1) knew the automatic stay was invoked, and 2) intended to commit the actions which violated the stay.   Knowledge that a bankruptcy petition has been filed satisfies the first requirement.  The intention requirement does not require specific intent to violate the automatic stay, but rather that the act itself was committed deliberately, even if acting on advice of counsel.  Rather than seeking relief from the bankruptcy court prior to submitting the substitution order, counsel for 4 Dakota submitted the order knowing the state court judge had not decided whether to enter such order prior to the filing of the bankruptcy petition.  The opposition to the Debtor's request to vacate the order constituted a further violation.  The subjective belief of counsel that the act was solely a ministerial act rather than a violation of the stay does not protect them.  Judge Specie cited the case In re Sanders1  for support for this proposition.  In Sanders counsel for a creditor filed in state court a request to hold the debtor in contempt after filing an appearance in the bankruptcy case.  While accepting that the filing of a contempt motion was a mistake by counsel, the court found that a mistake of law was no excuse, and that the violation was willful.    Judge Specie also cited the In re Lyubarsky2 case for the proposition that such sanctions could be awarded both against the creditor and it's counsel.  These sanctions were based on a demand for $250,000 coupled with a threat by counsel during settlement negotiations, subjecting counsel to compensatory damages for emotional distress, fees, costs, and punitive damages.  Judge Specie also expressed skepticism that that counsel truly believed that submission of the substitution order was a ministerial act, given that no ruling on the motion in the state court had been made as of the filing of the case, rather that the state court judge had to deliberate and exercise judicial discretion post-filing as to the motion.  Judge Specie rejected the case cited by 4 Dakota, Shakhrani v Escala3 given that in that case the court announced a ruling from the bench prior to the bankruptcy filing, and counsel had submitted the order after receiving notice that the bankruptcy had been dismissed, and before receiving notice that such case had been reinstated.  While a ministerial act is an exception to the automatic stay, many courts have held that entry of a written order, even if it mirrors a prepetition oral ruling from the bench, is not ministerial because it still requires some degree of judicial discretion.4   The court reserved ruling as to the damages to be awarded.1 In re Sanders, Case No. 8:20-bk-02731-RCT, 2020 Bankr. LEXIS 2840, 2020 WL 6020347 at *1 (Bankr. M.D. Fla. 15 Sept. 2020).↩2 In re Lyubarsky, 615 B.R. 924, 928 (Bankr. S.D. Fla. 2020).↩3 Shakhrani v. Escala, Case No 05-cv-4746(PGS), 2006 U.S. Dist. LEXIS 57294, 2006 WL 2376746 (D.N.J. 16 Aug 2006).↩4 See, e.g., In re Fontaine, 603 B.R. 94, 107 (Bankr. D.N.M. 2019) (state court's entry of foreclosure judgment postpetition based on a prepetition ruling was not ministerial where judge had to review debtor's objection to the form of the judgment); GemCap Lending I, LLC v. Bateman (In re Naturescape Holding Grp. Int'l, Inc.), Case No. 16-00982, 2018 Bankr. LEXIS 3062, 2018 WL 5099706, at *14 n.85 (Bankr. D. Haw. Oct. 2, 2018) (disagreed with a state court's ruling that entry of an order was post-petition was ministerial because "a judge is always free to enter a written order that varies from the oral ruling."); Corbett v. Kiraz (In re Kiraz), Case No. 11-35743-tmb7, Adv. No. 11-03294-tmb, 2012 Bankr. LEXIS 1595, 2012 WL 1120379, at *2 (Bankr. D. Or. Apr. 3, 2012) (written final judgment entered post-petition was not a ministerial act because "the trial court judge retained the discretion to alter his oral ruling in any way he saw fit.").↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703813 870-3100https://hillsboroughbankruptcy.com

After Bankruptcy: Please Don’t Go Right Out and Don’t Co-Sign for a Car Got an email last week that made me sad.  Cherry filed Chapter 7 bankruptcy back in 2017.  She recently went to buy a car and ended up getting financed by Santander at 21%. After she did that, she asked why is her […] The post After Bankruptcy: Please Don’t Go Out and Co-Sign for a Car by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.

Provided below is a link to an article at ABC discussing the shortage of Yellow Cabs in Manhattan. https://abc7ny.com/taxi-shortage-cab-delta-variant-covid/10930021/

There are some injuries and medical conditions that will limit a person’s ability to work. If you suffer from a medical impairment that makes it impossible to return to work, you might qualify for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI). To be eligible for disability benefits under either program, you must […] The post Does a Doctor Have to Fill Our Disability Paperwork in Pennsylvania? appeared first on .

Going through a divorce is often a difficult and stressful process. Marriages collapse for various reasons, including financial problems. It is not uncommon for a divorce to leave both spouses in economic ruin. One of the main reasons for filing for bankruptcy is divorce. That begs the question, “is it better to file for bankruptcy […] The post Should You File for Bankruptcy Before a Divorce? appeared first on .