In the last few months, OneMain has been contacting me about reaffirmation negotiation on car loans. That took me by surprise. With the exception of Ford Credit, I’ve been strongly opposed to reaffirming cars.  Usually you can keep the car without reaffirming. and then give it back when your credit improves. I explain more about […] The post After Bankruptcy, OneMain Offers Car Reaffirmation Negotiation by Robert Weed appeared first on Robert Weed - AE.

  On 23 August 2019 the HAVEN Act was enacted, which among other things, treats VA disability payments similar to social security payments, excluding them from the means test.  The issue coming before the Court in In re Gresham, 2020 Bankr. LEXIS 627, Case No 18-56289 (Bankr. E.D. Mich. 10 March 2020) was whether such change in the law applied to pending chapter 13 cases.  Ms. Gresham filed under chapter 13 on 4 December 2018.  At the time of filing she had regular employment income as well as monthly disability payments from the Department of Veterans Affairs ("VA").   Her case was confirmed on 27 March 2019 requiring payments of $300/mo biweekly toward her chapter 13 plan which provided for a 100% distribution to unsecured creditors.  On 29 October Ms. Gresham  filed a motion to modify the plan to reduce the payments to $250/bi weekly and to reduce the distribution to unsecured creditors based an an amended schedule now deducing $1,789/month of VA disability benefits from disposable income. 11 U.S.C. §101(10A) defines current monthly income ("CMI").  While initially including all sources, it then goes on to exclude certain benefits, such as social security benefits.  The HAVEN Act added VA disability benefits to the benefits excluded from current monthly income.  The Supreme Court determined in Bradley v. School Board of Richmond, 416 U.S. 696, 711 (1974) that a court is to apply the law in effect at the time it renders its decision, unless doing so would result in manifest injustice or there is a statutory or legislative history to the contrary.   Thus, the HAVEN Act would normally apply to any CMI  subsequent to 23 August 2019 absent manifest injustice or contrary legislative history.  The trustee does not identify any manifest injustice that would arise from application of the HAVEN Act to cases pending at the time of its enactment.  Nor does there appear to be any contrary legislative history.  Instead, the legislative history would appear to support application of the law to pending cases given the state congressional intent to 'correct' the Bankruptcy Code's 'obvious inequity' in failing to exclude VA benefits from CMI similar to the exclusion of social security benefits.1   The Judicial Conference policy also supports application to all pending cases, as lines 9 and 10 of forms 122A-1, B-1, and C-1 were all amended  to expressly exclude VA benefits, and the Judical Conference requires use of these Official Forms as of 1 October 2019 in all cases, not just cases filed after passage of the HAVEN Act.  The next question is whether the HAVEN act applies retroactively.  The Trustee cited Landgraf v. USI Film Products, 511 U.S. 244 (1994) for the proposition that there is a presumption against retroactive legislation.  The unsecured creditors possessed a right to rely on the debtor's schedules when the case was confirmed providing for a 100% distribution.  To apply the HAVEN Act retroactively would impair such creditors rights.  Thus, retroactive application of the Act is not permitted.  The final question is whether modifying a confirmed plan as to future payments is in effect a retroactive application of the HAVEN Act.   While §1327(a) of the Code provides that a confirmed plan is binding on the debtor and each creditor, with consequential res judicata effect; §1329(a) provides that a plan may be modified including to increase or decrease the amount of payments.  While the 4th Circuit requires a substantial and unanticipated change in the debtor's financial condition, the 1st, 5th, and 7th Circuits do not require such showing.  The 6th Circuit has held that there is no requirement of an unanticipated or substantial change in circumstances for a plan modification under §1329.  The passage of the HAVEN Act is not a change in the Debtor's income or expenses, but rather a change in the law.  The passage of the HAVEN Act and it's change in the definition of CMI is not something the Debtor or the Trustee could have anticipated at the time of confirmation of the plan.  It is not unfair to Debtor's creditors to apply the HAVEN Act to the computation of CMI going forward, as all creditors were noticed and have not objected.  To require Debtor to continue to pay additional funds to unsecured creditors based on her VA benefits would be contrary to a policy Congress expressly rejected as 'obvious inequity.'  Further, the Debtor could just dismiss the case and file a new case without any issue as to the application of the HAVEN Act.  Thus the Court found that the HAVEN act applies to plan modifications after it's passage as to ongoing payments, but can not apply to affect distribution to creditors prior to its passage.1 165 Cong. Rec. H7215-01, 2019 WL 3307655 (statement of Rep. McBath).↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703813 870-3100https://hillsboroughbankruptcy.com

How to Undo a Tax Sale of Your Home in Philadelphia Homes can be scheduled for tax sales for failure to pay real estate taxes or other municipal liens. How do you get your house back after a Philadelphia tax sale? If your home has been sold at a Philadelphia sheriff sale, you have a number of options to reverse the tax sale. It is possible in many cases to get your property back after it has been sold at a tax sale, but you must carefully follow all the rules to do so. Four Ways You Can Reverse the Tax Sale of Your Home 1. Negotiate Directly with the Purchaser of Your Home. You can contact the person or organization that purchased the property at tax sale and negotiate a buy-back. In some cases, the purchaser will allow you to buy the property back directly from him or her by paying the purchase price plus an additional amount of money to cover costs. If you elect to negotiate directly with the purchaser, make sure that everything is in writing. Having an attorney with you will both protect your interests and protect you from possibly being defrauded. 2. File a Motion to Redeem the Property. Under the Pennsylvania Municipal Claims and Tax Liens Act, if you have the funds you can go to Philadelphia Court of Common Pleas and file a motion to redeem the property. How does this work? You will pay the amount the property was sold for, any costs that the new owner incurred and an additional 10% interest as well as certain other charges. To have the power to redeem the property you must have lived in the house for at least 90 days prior to the tax sale and continue to have lived in the property after the tax sale, and meet certain other requirements as well. In other words, the rules for redemption do not apply if the property is vacant. A motion to redeem must be filed prior to the expiration of the nine-month period to redeem from the time of the acknowledgment of the sheriff’s deed. 3. File an Objection to the Tax Sale or a Motion to Set Aside the Tax Sale. These will do the same thing, procedurally. You can argue that the tax sale must be set aside because you were never given a notice of the sale, or some other procedural deficiency on the part of the sheriff or purchaser. If you win the court could set aside the tax sale. Be advised that setting aside a tax sale is not a simple matter. If you cannot prove that you were not given proper notice or that the sale was otherwise improper, then the sale will be upheld.  This is usually not an easy standard to meet, but an experienced attorney can help you. 4. File a Chapter 13 Bankruptcy Case to Redeem the Property Over Time. You must file your Chapter 13 bankruptcy prior to the expiration of the redemption period. In your Chapter 13 plan, you will redeem your home by paying the amount the property was sold for, any costs that the new owner incurred and an additional 10% as well as certain other charges. You will pay the Chapter 13 Trustee every month, who in turn will pay the purchaser.   You are allowed to include not only the home which was sold at the tax sale, but any other debts that you owe such as credit cards, medical bills, personal loans, income taxes, any mortgage arrears, any arrears on an auto loan, student loans as well as other debts. How to Avoid Sheriff’s Sale in Philadelphia The best approach of all of these is to avoid a tax sale in the first place. How? By dealing with the problem prior to the scheduled sale. You can go into the taxing authority and either 1) pay them up to date if you have the funds or 2) request a repayment plan if you do not have all the funds to pay the tax debt owed on your property.  You can also go to the Court of Common Pleas and formally request a postponement of the sale for good cause. What to Do If Your Home Was Sold at a Philadelphia Tax Sale If your home has already been sold, then you can get your home back after a tax sale in Philadelphia by following the above as a guide and consulting with an attorney who is experienced in helping individuals and families getting their home back after a tax sale. Philadelphia Bankruptcy Attorney David M. Offen has helped many individuals to get their home back after a tax sale. To schedule your free, no-obligation consultation, please call 215-625-9600.   The post How to Reverse a Tax Sale of Your Home in Philadelphia appeared first on David M. Offen, Attorney at Law.

   One of the duties of the US Trustee is to review cases for abuse, including seeking dismissal if a chapter 7 case should have been filed under chapter 13.  Their primary tools for this is 11 U.S.C. 707(b) where the means test reflects income sufficient to fund chapter 13, and 11 U.S.C. §727(a) which provides for dismissal for bad acts or misrepresentations by the debtor.  In the case In re Ibbetson, 2020 Bankr. LEXIS 612, Case #19-21109-PRW (Bankr. W.D. N.Y., 5 March 2020) the debtor filed chapter 7 on 6 November 2019, and the 341 was concluded on 11 December 2019, with a no asset report filed the next day.  The timely filed schedules reflected that the Debtor's primary debts were tax debts rather than consumer debts.  On 6 February 2020 the US Trustee filed a motion to extend the deadline to file complaints under §707(b) and §727(a) by an additional 60 days.  Such deadline was set to expire on 10 February 2020.   The US Trustee, like other entities, has a deadline to file to seek to deny the discharge.  Rule 1017(e)(1) of the Fed. Rules of Bankr. Proc. provides a deadline of 60 days following the date set for the initial 341 to file such a complaint under §707.  Rule 4004(b) FRBP sets a similar deadline for complaints under §727.  Both rules permit an extension of such deadline, but only 'for cause.'  The party seeking such extension has the burden of proof to demonstrate such cause.  The party must establish at least a reasonable degree of due diligence to be granted the extension.1   When such party fails to show that it has diligently prosecuted and investigation of the underlying issues or offered a reasonable explanation explanation of of why that investigation could not be completed within the time allotted, it has failed to meet the burden.2     The Court found that the US Trustee had failed to meet the burden to extend the deadlines in this case.  As to §707(b) the US Trustee appears to concede that Mr. Ibbetson's debts are primarily for income taxes.  Income tax debts do not meet the definition of consumer debts under 11 U.S.C. §101(8) and §707(b) onl applies to cases involving primarily consumer debts (11 U.S.C. §707(b)(1).   As to the request under §727, the cause asserted by the US Trustee is 1) the lack of a staff attorney to investigate,  2) the lack of a response from Mr. Ibbetson's attorney to the letter sent by the US Trustee requesting an extension (but not requesting information), 3) the Assistant US Trustee was out sick for 2 business day, 4) in her absence her staff reviewed the schedules and listed to the recording of the meeting of creditors on February 4, and 5) the Asst. US Trustee met with her staff on 5 February and determined that there were material questions requiring further investigation, and 6) the US Trustee prepared a letter to Debtor's counsel requesting an extension.   But no showing was made of a reasonable effort to diligently prosecute an investigation.  The US Trustee cites a letter received by their office on 31 January 2020.  While the US Trustee reached out in some manner to the chapter 7 trustee when it received the letter, it did not reach out to Mr. Ibbetson's attorney to investigate the allegations in the letter.  At the minimum a phone call to such attorney would have been an important an necessary first step in such investigation.  The emerging standard in this area is moving away from the liberal standard to one requiring the movant to establish a reasonable degree of due diligence.  Courts examine 1) whether the moving party had sufficient notice of the deadline and information to file an objection; 2) the complexity of the case; 3) whether the moving party has exercised due diligence; and 4) whether the debtor has been uncooperative or acted in bad faith.3   While the letter giving rise to the concern was delivered just 10 days prior to the deadline, all other factors are in favor of the Mr. Ibbetson.  Mr. Ibettson has not been uncooperative or acted in bad faith.  The case is not complex.  The final factor, whether the US Trustee diligently prosecuted and investigation of the issues raised by the mysterious letter tips in favor or Mr. Ibbetson as well.  Primarily due to the failure of the US Trustee to make factual inquiries of Mr. Ibbetson's attorney.  This era of shrinking staffs and the need to do more work with fewer resources exemplifies the need to replace slower methods of communication, such as letters, with less costly and more efficient methods, such as telephone or email.  The US Trustee should not be rewarded for clinging to such outdated methods of communication.  Should the US Trustee find a substantial issue, it still can seek revocation of the discharge under 11 U.S.C. §727(d) and (e) for one year after the discharge is granted.1 In re Bomarito, 448 B.R. 242, 248 (Bankr. E.D. Cal. 2011) (quoting In re Molitor, 395 B.R. 197, 205 (Bankr. S.D. Ga. 2008).↩2 Bomarito, 448 B.R. at 251↩3 In re Nowinski, 291 B.R. 302, 305-06 (Bankr. S.D.N.Y. 2003).↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703813 [email protected]://hillsboroughbankruptcy.com

Outstanding debt is higher than ever. The Federal Reserve Bank of New York reports that household debt in the United States has now reached its highest-ever total: more than $14 trillion.Regardless of the debt you’re suffering from, you might not see an end in sight. Is there a chance you can get out of debt without paying?The answer is maybe, depending on a number of factors. Here are some ways you can explore getting out of debt that don’t include paying it.How you can get out of debt without payingDebt might feel homogeneous, but each type is different — so your options will depend on which type you’ve accrued. Before you stop paying, make sure you know the limitations and the long-term ramifications of doing so.How to get out of student loan debt without payingThere are a few different options for getting out of student loan payments. Your loan, job status and sometimes the school you attended all determine what you’re eligible for.Income-driven repayment plans: These revise your monthly payment to 10 to 20 percent of your income for the next 20 or 25 years (depending on the plan). After that, the remaining loan balance is forgiven.Public Service Loan Forgiveness: Available for those who work in the public sector, like employees at the federal, state and local level, and for those who work for a nonprofit organization. After you’ve made 120 qualifying payments while working full time for a qualifying employer, the rest of your Direct Loans will be forgiven.Teacher Loan Forgiveness: Open to teachers who work five consecutive years at a low-income elementary or secondary school and to those who work at an educational service agency. You might qualify for forgiveness of up to $17,500 of your Direct Loans or Stafford Loans.Perkins Loan Cancellation: Teachers, firefighters, law enforcement officers and others are eligible for Perkins Loan cancellation or discharge. Cancellation can happen over the course of five years, while discharge could happen in the event of bankruptcy, death or disability.Closed school discharge: If your school closed while you were attending (or soon after you withdrew), you may qualify to have your federal student loans discharged.Discharge options: You could get your loans discharged in the event of death, permanent disability or — very rarely — bankruptcy.For most options, you’ll need to make qualifying, timely payments each month. However, even then, not everyone qualifies or receives forgiveness. For instance, less than 1 percent of Public Service Loan Forgiveness applicants were approved and considered eligible.You can’t have a defaulted loan forgiven, but defaulted loans may qualify for discharge, depending on the loan and the program.How to get out of credit card debt without payingIf you have more credit card debt than you can handle, there are a few steps you can take; however, you may want to consider the repercussions.If you stop paying your credit card bill, it gets turned into collections and your credit score tanks. But there’s a statute of limitations for how long creditors can sue you for outstanding credit card debt, which varies from three to 10 years in most states. You could skip payments, but you might be liable for them later. Even at that point, if you are sued for outstanding payment, you most likely wouldn’t win the case.Another route is debt settlement, which is when you settle your debt with the current lender (or collection agency, if it’s reached that point) for less than what you owe. You may not be responsible for your entire credit card debt, but you’d still pay some of it.How to get out of debt through bankruptcyBankruptcy should only be considered if you don’t have any other options. Filing for bankruptcy may sound like you’re starting over, but depending on the route you go, you may still be on the hook for some of your outstanding debt.In a Chapter 7 bankruptcy filing, some of your assets are sold off to pay back debt, meaning you could lose your home and personal property. A few months after filing, your remaining debt will be discharged — although Chapter 7 typically won’t cover things like student loan debt or child support.In a Chapter 13 filing, you get set up on a court-ordered repayment plan. Any remaining debt after a certain time has passed, like five years, might be discharged. This process means you’ll spend even longer paying off your debt, and you’ll also have a bankruptcy filing on your credit report.Depending on the type of bankruptcy you file, a bankruptcy filing could stay on your credit report for up to 10 years, which is why it’s important to carefully weigh your options and your outstanding debt. Debt collectors can’t attempt to collect a debt that was discharged in bankruptcy, and they can’t continue collection activity while the bankruptcy case is pending — but the filing itself will have long-term effects on your financial health.Why not paying off debt doesn’t workYour credit report is a vital part of your financial well-being. Late or missed payments, defaults, collections and bankruptcies not only crush your credit score, but can also hurt your chances of taking out a loan or getting approved for a credit card.Not paying your bills also puts you in a dangerous position with lenders. Avoiding payment means that creditors can sue you for unpaid bills. In some states, you could get your wages garnished or have your assets seized. Even if you aren’t making the payments directly, you’re still paying your outstanding debt.Alternatives to bankruptcyIf you have the chance to avoid bankruptcy, you should take it. Here are some alternatives to consider.Supplement your income: Whatever you need to do to start paying off your debt, do it now. Ask for a raise at work or move to a higher-paying job, if you can. Get a side-hustle. Start to sell valuable things, like furniture or expensive jewelry, to cover the outstanding debt.Ask for assistance: Contact your lenders and creditors and ask about lowering your monthly payment, interest rate or both. For student loans, you might qualify for temporary relief with forbearance or deferment. For other types of debt, see what your lender or credit card issuer offers for hardship assistance. If you have the means, see if friends and family will help you.Take out a debt consolidation loan: If you have many different types of debt, look into consolidation options. Taking out a debt consolidation loan is a way to simplify your finances — putting all of your debt in one place — and potentially pay less interest in the long run.Get professional help: Reach out to a nonprofit credit counseling agency that can set up a debt management plan. You’ll pay the agency a set amount every month that goes toward each of your debts. The agency works to negotiate a lower bill or interest rate on your behalf and, in some cases, can get your debt canceled.The bottom lineIt can feel like it’ll take a lifetime to get out of a huge debt trap. You may skip payments, consider not paying at all or file for bankruptcy. While you might, in certain circumstances, get out of paying your outstanding debt, the likelihood is low. And more often than not, it’s harmful to your financial well-being to avoid paying your outstanding debt.

  A district court in Pennsylvania ruled on a motion to dismiss a FDPCA claim against LVNV and Resurgent Capital by plaintiffs who allege that in 4 separate chapter 13 bankruptcy cases LVNV Funding, LLC and Resurgent Capital Services, LP (hereinafter 'LVNV' filed false proofs of claims by including interest and fees in the principal balance, without checking a box on the claim stating that such claims included interest and fees.  Howard v. LVNV Funding, Inc., 2020 U.S. Dist. LEXIS 34697, Case No 3:19-cv-93 (W.D. PA, 28 February 2020).  Plaintiffs alleged that the inaccurate claims violated 15 U.S.C. §1692e prohibiting the making of false or misleading representations in collecting debts, and §1692f barring use of unfair or unconscionable debt collection practices.  The claims ranged from $309.36 to $1,148.62.  The Court found that LVNV knew the amounts included interest and fees based on the records of the debts it received when it purchased the claims, but that it is their regular practice to either withdraw the claim after the debtor objects, permit the court to disallow the claim by default, or to provide correct information after the bankruptcy court orders it to do so.  LVNV initially argued that the Bankruptcy Code preempts the FDPCA.   The Court disagreed, finding that in this instance both the provisions of the FDPCA and the Code are enforceable without any conflict.  The Code and FDPCA would conflict only where they impose conflicting obligations upon a debt collector.  The availability of separate and overlapping remedies does not necessitate preclusion.1  The obligations under Bankruptcy Rule 3001 require a creditor to fill out Form 410, which requires a creditor to state whether the amount owed includes interest or other charges.  The FDPCA has similar requirements, prohibiting collectors from falsely representing the character or amount of debts they seek to collect.  15 U.S.C. §1692e, as well as barring use of false or misleading representations in debt collection activities, 15 U.S.C. §1692f.  The Court also noted that while the filing of a proof of claim is an attempt to collect a debt under the FDPCA, such filing does not violate the automatic stay provision, which only bars debt-collection activity that occurs outside the bankruptcy proceeding.  The Court denied LVNV's motion to dismiss as to §1692e.  In order to state a claim under FDPCA, a plaintiff must show 1) he or she is a debtor; 2) the defendant is a debt collector; 3) the defendant's acts constitute an attempt to collect a debt under the FDPCA; and 4) those acts violate an FDPCA provision.2   LVNV only disputes the 3rd and 4th elements.  The Court previously found that the filing of a claim is an attempt to collect a debt covered by the FDPCA, so the only remaining issue is whether the filing of the claims in these cases violated an FDPCA provision.   Collectors are required to make truthful, nonmisleading representations to debtors.  15 U.S.C. §1692e.   The making of false, deceptive, or misleading representations while collecting a debt is a FDPCA violation.  The 3rd Circuit follows the 'least sophisticated debtor' standard: ie if plaintiff can show that the least sophisticated debtor would be misled by the representation they can support the FDPCA claim.3  The claim also must be material, in that it has the potential to affect such least sophisticated debtor's reasoning.  The allegations in the complaint give rise to a plausible claim that LVNV made materially false or misleading representations in attempting to collect these debts.  It represented that the amount sought was solely principal when it was not.  Even if the total debt was correct, the least sophisticated consumer could have been mislead by such representation.  Accordingly the motion to dismiss the §1692e claim is denied.  The Court granted the request to dismiss the §1692f claim, finding that the conduct was neither unfair nor unconscionable.  While the claims did not break down the interest, principal, and fees; the proof of claim is the only permissible form of communication with a debtor in the bankruptcy process.  Communicating the existence of a debt through an approved method is neither unfair nor unconscionable.  A claim under §1692f requires the same elements as §1692e.  Again, the only element remaining in dispute is the fourth, whether LVNV violated the FDPCA's prohibition on unfair or unconscionable debt collection practices.  The Second Circuit had held that to meet this standard, the debt collection practices must be 'shockingly unjust or unfair, or affronting the sense of justice, decency, or reasonableness'.4   The filing of a false or misleading claim by itself does not rise to this standard.  The allegations do not support the inference that LVNV filed the claims primarily to harass the plaintiffs.    Also, plaintiffs cannot rely on the same conduct to establish violations of two separate FDCPA provisions.1 Simon v. FIA Card Servs., N.A., 732 F.3d 259, 278-79 (3d Cir. 2013).↩2 Douglass v. Convergent Outsourcing, 765 F.3d 299, 303 (3d Cir. 2014).↩3 Jensen v. Pressler & Pressler, 791 F.3d 413, 418-19 (3d Cir. 2015).↩4 Arias v. Gutman, Mintz, Baker, & Sonnenfeldt LLP, 875 F.3d 128, 135 (2d Cir. 2017).↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703813 870-3100https://hillsboroughbankruptcy.com

Yes, but you must consider all of the ramifications of filing bankruptcy upon your unique financial situation before you file. What is a reverse mortgage? Seniors over the age of 62 who own their home outright or have significant equity in their home often tap into that equity by taking out a reverse mortgage. A reverse mortgage provides those homeowners with monthly income from their lender, typically for their lifetime, and they can stay in their home If you are one of these seniors, what happens if your bills become too much to handle, or you fall behind on your car or utility payments? It might occur to you that filing bankruptcy is an option. However, there are some situations in which bankruptcy and a reverse mortgage are compatible, and many situations where they are absolutely not. Following are the primary considerations when you have a reverse mortgage and are considering bankruptcy in PA. 1. Why do you think you need to file bankruptcy in PA? What type of debt do you have? Credit card bills? Medical debt? Personal loans? These can easily be taken care of in a Chapter 7 bankruptcy filing, however, there will be an effect on your reverse mortgage. Most people have the type of reverse mortgage that flips equity in the home into a monthly payment to the homeowner from the lender. The thing is, the lender cannot make those monthly payments to you while your bankruptcy case is active. If you wanted to file a Chapter 7 bankruptcy case, you would have to have about 6 months’ worth of expenses saved up to survive that period. Now, if you are behind on a car loan and you need a way to pay the arrears to the lender and keep that car, filing Chapter 13 bankruptcy is the way to go as long as you can make the regular monthly car payment outside the Chapter 13 plan, and pay a monthly amount to the Chapter 13 Trustee to pay your car lender.  However, a Chapter 13 case lasts either three or five years – few people have that amount of money saved up and could go without their monthly reverse mortgage payment. 2. What is your property worth, and what is the reverse loan balance? This information is crucial, as you are likely asking this question because you want to protect your home! Typically, when you take out a reverse mortgage there must be at least 50% equity in the home – meaning, you only owe half of what the property is worth. Depending upon the value of your home, it may be difficult to protect that amount of equity from seizure by the Chapter 7 Trustee with any applicable exemptions. The timing of a bankruptcy filing matters. If you took that reverse mortgage out some time ago, the loan balance will have increased and the amount of equity decreased, making it easier to protect your home in bankruptcy. If home values increased since you took the reverse mortgage out, you could run into the same problem – too much equity to protect. But if home values have decreased, then it might be easier to file bankruptcy and protect your home with a bankruptcy exemption. Property value and reverse mortgage loan balance – these are two of the crucial bits of information you’ll need to determine whether bankruptcy is for you. Ask your lender for a document called a “10-day pay-off,” which give you your loan balance to take to your attorney consultation. 3. What type of reverse mortgage is it? Look at your Reverse Mortgage – What are the Terms? Depending upon the type of reverse mortgage you have and its terms, you may be able to protect your home in Chapter 7 bankruptcy even if it looks like the amount of equity you have in it exceeds available exemptions. How is this done?  Your lender files a document called a “proof of lien” and you may be able to reaffirm the mortgage debt and keep the house in your Chapter 7 filing. Some reverse mortgage agreements require you to surrender your home to your lender if you file bankruptcy in PA. Other agreements provide that the lender can end the reverse mortgage and retain the lien on your property. You are your attorney should review your reverse mortgage documents very carefully to determine the effect bankruptcy will have on your reverse mortgage. What is the Amount of Your Monthly Reverse Mortgage Payment? If you are considering filing under Chapter 7, you will need to determine if you will pass the means test.  This is the test that weighs your income with some designated expenses and assets and determines if you are eligible to file Chapter 7. The monthly reverse mortgage payments you receive are considered income for the purposes of the means test. Do you receive too much to qualify?  Perhaps on it face your income is too high to file under Chapter 7, but the means test also takes into consideration certain necessary expenses – medically necessary expense included.  Your attorney can look at all aspects of your financial situation and determine whether you are eligible to file Chapter 7. In some cases, the Reverse Mortgage Company will dispense the money to you in one lump sum. How We Recently Saved a Client’s Home An older gentlemen came into see us. He had taken out a reverse mortgage. As part of the agreement, he remained responsible for paying the property taxes and homeowner’s insurance on the home, but he failed to do so. After 2 years, the mortgage company started a foreclosure proceeding on the reverse mortgage. The homeowner had no savings and the mortgage company refused to allow him any time to get together the past-due monies, which totaled over $11,000.00. During his initial consultation with us, he indicated that he wanted to spend the rest of his living years in this house and asked what his options were. We advised him that we could help him file a Chapter 13 bankruptcy case to give him time to make up the missed real estate tax and homeowner’s insurance payments. We filed a Chapter 13 case for him and gave him five years to get caught up on the missed  and real estate tax and homeowner insurance payments. The homeowner’s Chapter 13 plan proposed that he make a payment every month to a Chapter 13 Trustee and he resumed paying the real estate taxes and the homeowner’s insurance as those bills became due. Our client’s plan was approved by the court and he was able to save the house, which he had owned for many years prior to taking out the reverse mortgage. An unexpected benefit for our client was that several personal loans he had taken out were discharged as unsecured debt! Every situation is unique – get help in making this decision before filing bankruptcy with a reverse mortgage in PA. Consult with a Philadelphia reverse mortgage attorney who can help you weigh your options and make the right decision for you and your financial situation and goals. Your initial consultation is free! We will look at your reverse mortgage documents, your other income, your expenses, your assets, the value of your home, and the loan balance and discuss bankruptcy options as well as alternatives to bankruptcy in PA with you. Let us help you get a fresh start!   The post Can I File Bankruptcy with a Reverse Mortgage in Philadelphia? appeared first on David M. Offen, Attorney at Law.

New York taxi drivers and politicians are raising alarms after a secretive hedge fund this week quietly became the city’s largest owner of taxi-medallion loans.Marblegate Asset Management — a tight-lipped investment firm that has already scooped up some 300 medallions and 1,000 loans, many of them previously owned by disgraced “Taxi King” Gene Freidman — has taken over loans tied to an additional 3,000 New York medallions, sources told The Post.The deal — valued at about $350 million with the inclusion of an additional 1,500 loans from Chicago, Philadelphia and other cities, according to sources — makes Marblegate New York City’s biggest-ever owner of medallion loans, with nearly a third of the total of 13,500 issued.The Greenwich, Conn.-based hedge fund didn’t respond to requests for comment, even as critics raised fears that the deal could spell more bad news for cab drivers.The market value of a New York City taxi medallion — which had topped $1 million in late 2013 — has since tanked below $200,000 with the rise of ride-sharing startups like Uber and Lyft. With passengers defecting in droves, New York’s yellow-cab drivers are facing mounting debts, with nine suicides reported in the last two years.Some industry sources said they were skeptical whether Marblegate would be interested in taking a haircut on the loans to help out taxi drivers.“[Marblegate] is happy owning these assets because they want to own a superfleet and build economies of scale,” according to one industry insider. “The idea is to keep buying the loans, keep foreclosing on them and keep gobbling up medallions until you control the market.”About 60 members of the New York Taxi Workers Alliance had driven down to Virginia on Wednesday in a last-ditch effort to stop Marblegate’s purchase of the loans from the National Credit Union Administration, a federal agency that had taken on the New York loans after the collapse of two local credit unions in 2018.“It’s ridiculous,” said Bhairavi Desai, the taxi driver group’s executive director. “We’re pretty pissed off.”Letitia James preps suit against city over medallion debt crisisDesai says the group met with NCUA reps two weeks ago to discuss letting the Taxi Workers Alliance find a private partner that would help the nonprofit buy the loans. The alliance has said it wants to restructure the loans at uniform values of $150,000 and freeze monthly payments on those debts at $900.Instead, Desai said that the NCUA — which said in a Wednesday announcement it has lost $760 million holding onto the debt — simply turned around and sold the medallions to the highest bidder.“We are fiduciaries for the share insurance fund. We are not some hedge fund selling assets,” NCUA board member J. Mark McWatters told the 60 visiting New Yorkers at the regulator’s monthly board meeting in Virginia. “We needed to take this offer.”The NCUA has assured the Taxi Workers Alliance that Marblegate is open to talking debt relief with medallion owners and that a meeting between the parties to start those talks has been set for “sometime next week,” Desai said.City officials are equally concerned about what putting an outsize share of taxi medallions in the hands of a hedge fund means for taxi operators on the brink.“People will read this story and think about committing suicide,” said City Council Member Ydanis Rodriguez, chair of the Transportation Committee. “We cannot wait for the city to create a public-private partnership to buy medallions in foreclosure and hold the medallions so that the debt on them can be reduced. We need to act yesterday on fixing this.”

The state’s attorney general is seeking $810 million from the city to compensate financially struggling taxi medallion owners. New York State’s attorney general on Thursday accused New York City of committing fraud by artificially inflating the value of yellow taxi medallions, and she demanded $810 million from the city to compensate the thousands of cabdrivers who are now saddled with enormous debt.The city’s Taxi and Limousine Commission marketed the medallions — city-issued permits required to own a yellow cab — as “a solid investment with steady growth” and reaped a profit from the sale of thousands of them at auction at exorbitant prices from 2004 to 2017, according to an investigation by the attorney general’s office. The attorney general, Letitia A. James, said the city must provide financial relief to the debt-ridden taxi medallion owners within 30 days or she would sue for fraud, unlawful profit and other violations of state law. “These taxi medallions were marketed as a pathway to the American dream, but instead became a trapdoor of despair for medallion owners harmed by the T.L.C.’s unlawful practices,” Ms. James said. “The very government that was supposed to ensure fair practices in the marketplace engaged in a scheme that defrauded hundreds of medallion owners, leaving many with no choice but to work day and night to pay off their overpriced medallions.’’Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, which represents cabdrivers, said she welcomed Ms. James’s action and saw it as a validation of the city’s culpability in the taxi crisis. “The devastation that has happened across the taxi industry has been a deep betrayal by the city,” she said. “Not only did they close their eyes to predatory practices and directly engage in inflating the prices but they then allowed in Uber and Lyft completely unregulated.” Freddi Goldstein, a spokeswoman for Mayor Bill de Blasio, said that although the taxi crisis began under Michael R. Bloomberg’s administration, city officials since then have taken steps to provide financial help to taxi drivers and tighten oversight of Uber and other ride-hailing companies. The attorney general began her inquiry in response to an investigation by The New York Times, which found that a handful of taxi industry leaders earned hundreds of millions of dollars by deliberately inflating the price of a medallion to more than $1 million from about $200,000. The Times found that thousands of drivers, many of them immigrants, thought they were safe taking out loans to buy medallions because of the taxi commission’s assurances of their high value. City, state and federal officials exacerbated the problems by exempting the industry from regulations, The Times revealed. The city also filled in budget gaps by selling medallions and running ads promoting the permits as “better than the stock market.” Ms. James said that the city continued to market the medallions at inflated prices even after internal warnings were raised. During the last auction for medallions in 2014, the city sold 350 new medallions at the height of the market, generating $359 million in revenue. Since then, medallion prices have cratered, selling for a fraction of the record $1.3 million price in 2014. In many cases, they are worth far less than what their owners borrowed to buy them. In 2018, New York became the first major American city to adopt a one-year moratorium on issuing new vehicle licenses for Uber, Lyft and other ride-hail services. It came three years after Mr. de Blasio attempted to adopt a similar cap but abandoned the effort after Uber waged a fierce campaign against him. Since then, the city has extended the moratorium. “This crisis has been ours to solve — working tirelessly to clean up the carelessness and greed of others,” Ms. Goldstein said. “If the attorney general wants to launch a frivolous investigation into the very administration that has done nothing but work to improve the situation, this is what she’ll find.” But Ms. Desai said the city’s response has been slow and its efforts so far have generally been underwhelming. She noted that the city waived some small fees for taxi owners even as they drowned under huge debts. “There has been no substantial financial relief — this restitution would be the first,” she said.The city comptroller, Scott M. Stringer, said Ms. James had made “significant allegations” and that his office “takes these issues very seriously.” The city controls the number of medallions — currently capped at just under 13,600 — to prevent an oversupply of cabs like what happened in the 1930s when concerns over congestion, reckless driving and cut-rate fares led the city to step in. As medallion prices soared, drivers were steered into taking out loans totaling billions of dollars that they could never repay, plunging many into bankruptcy. A spate of suicides by taxi owners and professional drivers in recent years underscored the severity of their plight and has spurred city legislation to try to improve their working conditions. A spokesman for Ms. James said that while Thursday’s action was focused on the city’s role in the taxi crisis, their ongoing investigation continued to examine “all aspects of the taxi industry.” The United States Attorney’s office in Manhattan has also launched a criminal investigation. Taxi industry leaders have denied doing anything wrong, characterizing their actions as normal business practices. They have sought to blame the taxi meltdown entirely on the rise of competing ride-app services such as Uber and Lyft. Last month, a city panel appointed by the New York City Council and Mr. de Blasio proposed a bailout of up to $600 million for taxi drivers, but most of that money would come from private investors. Ms. James is seeking $810 million directly from the city. It is unclear how her demand would affect the bailout plans. City Councilman Ydanis Rodriguez, who was the co-chairman of the panel, said he believed the city did bear some responsibility for creating the taxi crisis, and as a result, it had an obligation to provide financial relief to taxi owners. He added that the city should consider all proposals, including Ms. James’s demand for compensation as well as the private-public bailout proposed by the panel. “What I know is this crisis is so huge and the medallion owners are so desperate that they cannot wait any longer,” Mr. Rodriguez said. Ms. James said the payment from the city would be used to pay restitution to taxi medallion owners, which could include paying off loans, and compensating them for damages resulting from the city’s actions. She also plans to take additional measures to prevent the Taxi and Limousine Commission and the city from inflating taxi prices in the future.Nino Hervias, a taxi owner and spokesman for the Taxi Medallion Owner Driver Association, which represents many immigrant taxi owners, said that it was time that the city was held directly liable for destroying the yellow taxi industry and pushing so many drivers into bankruptcy.

  The Bankruptcy Court for the Western District of New York issued two decisions on 19 February 2020 setting aside real property tax foreclosure sales on the homes of chapter 13 debtors.  In re Hampton,  2020 Bankr. LEXIS 447, Case No 17-20459-PRW, Adv No. 17-2009-PRW (Bankr. W.D. N.Y. 19 Feb 2020) and In re Gunsalus, 2020 Bankr. LEXIS 446, Case No. 17-20445-PRW, Adv. No 17-2008-PRW (Bankr. W.D. N.Y. 19 Feb 2020).  Both debtors filed adversary proceedings under 11 U.S.C. 550(a) to set aside the prepetition tax sales.      The Hamptons, who filed chapter 13 on 2 May 2017 stipulated that the unpaid taxes totaled $5,157.73 vs. a fair market value of the property between $60,000 and $87,000 as of the date the county was awarded title to the home, 7 March 2017.  The county subsequently conducted a post-foreclosure auction sale of the property, netting the county over $21,000 after payment of all taxes, which the county was entitled to keep under state law.   The Gunsaluses filed chapter on 28 April 2017.  The taxes owed on their property was $1,290.29, and the county obtained a final judgment of foreclosure on 9 June 2016.  The value of the Gunsaluses' home was  between $28,000 and $30,000 on that date.  The county conducted a post-foreclosure auction sale on this property on 17 May 2017.  The court found both debtors were insolvent on the date of the transfer of the property (the date of the final judgment of foreclosure).  Under 11 U.S.C. 548(a)(1)(B) a trustee may set aside a constructively fraudulent conveyance if 1) the debtor had an interest in property; 2) a transfer of the property occurred within two years of the filing of the bankruptcy; 3) the debtor was insolvent at the time of the transfer or became insolvent as a result of the transfer, and 4) the debtor received less than reasonably equivalent value in exchange for the property transfer.  Under §522(g)(1) and (h) the debtor may avoid such transfer if 1) the transfer was not voluntary; 2) the property was not concealed by the debtor; and 3) the trustee did not attempt to avoid the transfer.   While the party seeking to avoid the transfer has the burden of proving each element by a preponderance of the evidence, there is no dispute in these cases that all the elements of §522(h) are met.  The only dispute in these cases is whether the last element under §548(a)(1)(B) is met, whether the debtors received reasonably equivalent value in exchange for the transfer of the title to their home.  In making this determination the court must determine whether the debtors' economic position immediately after the tax foreclosure was equivalent to their economic position before the tax foreclosure.1   Examining either the appraised value of the properties at the time of the tax foreclosure sale, or the amount received by the county at the subsequent post-seizure auction, reflects a purchase price between 4.6% and 19.1% of the fair market of the property.  The court finds that a price of 19.1% of the fair market value is not reasonably equivalent to the value of the property.  The fact that the debtors may have been able to exempt the excess value of the property, resulting in no benefit to creditors does not prevent the setting aside of the transfer.  The case cited by the county, In re Murphy2 is distinguishable as it had been converted to a chapter 7 liquidation.  Further, the $10,000 New York homestead exemption in that case, unlike the federal homestead exemption, is subordinated to and effectively eliminated by a tax lien for purposes of §522(g)(1).  Third, the trustee in Murphy did commence an action to avoid the transfer of the property.  These differences allowed the Murphy court to find that the debtor there was not legally harmed by the forfeiture of the property.  The debtors in the cases at bar do have the right to avoid the transfer because 1) they claimed the federal homestead exemption; 2) the transfer of the property was not voluntary; 3) the property was not concealed; 4) the transfer is avoidable by the trustee under §548; and 5) the trustee did not attempt to avoid the transfer.    The fraudulent transfer provisions are intended not only to ensure a fair distribution to creditors but also a fresh start to debtors.   The bankruptcy court had enjoined the transfer of title to the third party bidder at the post-foreclosure auction.  The court found that requiring return of title to the debtors would provide in indirect but important benefit to the estate by greatly increasing the probability of a successful reorganization under chapter 13.  Thus, the court ordered the county to restore the debtors ownership and possessory rights to the property, and voided the post-foreclosure auction; requiring a refund by the county to the third party bidder at such auction.  The court kept the tax lien in place until the tax debt is repaid through the chapter 13 plan.  The court also overruled the county's objection to the debtors' homesteads, finding that under §522(c)(2)(B) the property exempted remains liable for any debt secured by the tax lien until the lien is satisfied. 1 In re Clay, 2015 Bankr. LEXIS 2039 at 7, (Bankr. E.D. Wis. 2015).↩2 331 B.R. 107 (Bankr. S.D. N.Y. 2005).↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703813 870-3100https://hillsboroughbankruptcy.com