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The decision to file for either Chapter 7 or Chapter 13 is a big one. This decision is one that requires substantial consideration and expertise. One of the most significant aspects of my work as a Sacramento Bankruptcy Attorney is to advise Sacramento area residents as to whether bankruptcy is a viable decision for him/her to begin with. Many individuals who schedule a consultation with my office are anxious to avoid filing Chapter 7 or Chapter 13 and come to my office in an attempt to explore the options available to them. In some cases, potential clients have specific matters that need to be addressed under their economic circumstances.

The first thing a person considering bankruptcy needs to take into account is the amount of debt the person has looming over his/her shoulders. Chapter 7 or Chapter 13 is really not a wise step to take if your debt to income ratio or debt to assets ratio are relatively low. The Bankruptcy code was revised in 2005, making it more difficult for a person to qualify for Chapter 7 in the first place. Thus, this question of whether bankruptcy can provide a solution to the debtor is often resolved by a simple mathematical equation. If an individual qualifies for Bankruptcy under the revised code, then there is a high probability that the individual has a high debt to income ratio which can be resolved by filing.

A simple way to calculate this ratio is for a person to examine his/her monthly expenses for all your necessary monthly obligations. This means the debtor needs to compile his/her monthly payments for things such as housing, vehicle, and living expenses. Do not include payments for credit cards or other nonessential expenses. Next, the debtor must compare that number with his monthly income. As a general rule, if the debtor cannot pay off his outstanding debts with the balance of his income that exceeds the necessary monthly expenses, over a three year period, bankruptcy may be a good option.

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Los residentes en el área metropolitana de Sacramento son probablemente conscientes de que, en general, la ley prevé los jueces con amplio margen de discrecionalidad para imponer sanciones a las personas físicas y morales que aparecen frente a ellos. Como tal, cualquier residente que enfrentan una ejecución hipotecaria o posible bancarrota del capítulo 7 puede estar interesado en saber que los jueces se han vuelto cada vez más estrictas contra los prestamistas hipotecarios en los casos de ejecución hipotecaria se escuchan en sus salas de audiencias. Ayer, el Washington Post publicó un artículo destacando la tendencia actual con el comportamiento de los jueces contra las compañías de hipoteca en sus salas de audiencias. Si bien el nivel de tolerancia de errores en el papeleo depende del juez que conoce del asunto en particular, los jueces en su conjunto tienen una reputación cada vez mayor de fallo en contra de los prestamistas hipotecarios cuando los problemas papeleo o surgen problemas.

Un juez, Jeffrey Spinner, de Nueva York, estima que se ha despedido hasta el 50 por ciento de los casos de ejecución hipotecaria ante él sobre la base de documentos descuidado o fraudulentas presentadas por los prestamistas. De hecho, el juez Spinner recientemente borrado casi 300.000 dólares en deuda y le dio una casa de nuevo al prestatario de forma gratuita porque el papeleo de la entidad crediticia fue tan equivocada y su comportamiento en las negociaciones con el individuo era “repugnante”.

Decisiones como éstas pánico huelga en la industria de préstamos hipotecarios y el proceso de ejecución hipotecaria. Las compañías hipotecarias temen que los despidos como el visto por el juez Spinner podría establecer un precedente extraordinario y agitar el sistema nacional de ejecución hipotecaria. Este tipo de decisiones tienen los bancos preocupados y que planean apelar lo que consideran remedios drásticos de entre 20 y 50 por ciento de los casos de ejecución hipotecaria en el área de Nueva York.

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Residents in the Sacramento metropolitan area are probably aware that, in general, the law provides judges with broad discretion to impose sanctions on the individuals and corporations that appear before them. As such, any resident facing foreclosure or possible Chapter 7 bankruptcy may be interested to know that judges have become increasingly stringent against mortgage lenders in the foreclosure cases being heard in their courtrooms. Today, The Washington Post published a story highlighting the current trend with judges’ behavior against mortgage companies in their courtrooms. While the level of tolerance for mistakes in paperwork depends on the particular judge hearing the case, judges as a whole have an increasing reputation for ruling against mortgage lenders when paperwork issues or problems come up.

One Judge, Jeffrey Spinner, out of New York estimates that he has dismissed up to 50 percent of the foreclosure cases brought before him on the basis of sloppy or fraudulent paperwork filed by lenders. In fact, Judge Spinner recently erased nearly $300,000 in debt and gave a house back to the borrower for free because the lender’s paperwork was so flawed and its behavior in negotiations with the individual was “repugnant.”

Decisions like these strike panic in the mortgage lending industry and foreclosure process. Mortgage companies fear that dismissals like the one seen by Judge Spinner could establish an extraordinary precedent and stir up the country’s foreclosure system. These types of decisions have the banks worried and they plan to appeal what they consider to be drastic remedies from between 20 to 50 percent of foreclosure cases in the New York City area.

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Sacramento area residents considering Chapter 13 bankruptcy may be interested to know that bankruptcy law allows a filer to “cram down” an automobile loan to its fair market value. A “cramdown” is the lending and bankruptcy term that allows a borrower to eliminate any excess principal owed on a loan to the market value of the property that secures the loan. Mortgage Lender’s made the “cramdown” issue highly visible last year when Congress considered passing a law that would have allowed home mortgages to be “crammed down” under a Chapter 13 bankruptcy. Due to the vociferous opposition posed by the mortgage lending industry Congress never passed that law. However, the law remains settled that a Chapter 13 debtor can use a “cramdown” on just about any loan other than a primary home mortgage.

A “cramdown” is available to a Chapter 13 debtor on just about every type of secured loan besides the loan on a first deed of trust or mortgage. This means the “cramdown” is available for loans on trucks, cars, second homes, boats, and just about any property that would be foreclosed or repossessed in the borrower fails to make payments. Most Chapter 13 debtors use this law on their personal vehicles. Pursuant to the Bankruptcy Code, the “cramdown” remains available on vehicles purchased more than 30 months ago. Thus, if a debtor owes $15,000 on a vehicle whose value is only $12,000, he/she could “cram down” the remaining $3,000 son long as the vehicle was bought more than 30 months ago. The bankruptcy law also allows the debtor to modify the interest rate affecting the loan to the current “prime” interest rate plus 3 percent. Depending on the conditions whereby a debtor received the loan this could drop their interest rate substantially.

Use of the Chapter 13 “cramdown” can benefit a Chapter 13 debtor substantially by allowing him/her to retain their personal vehicle at a more affordable monthly payment. This mechanism allows my client’s to maintain their possessions and experience as little change as possible after filing the voluntary petition.

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Los residentes de Sacramento, que está considerando presentar el Capítulo 7 o el Capítulo 13 puede estar interesado en saber que JPMorgan Chase ha decidido volver a examinar los documentos que presentó en aproximadamente 56.000 casos de ejecución hipotecaria. Estos problemas actuales giran en torno a firmas recogidas por los empleados en las declaraciones juradas sobre los documentos de préstamo que no se evaluaron de forma independiente.

Chase ha pedido a los tribunales de revisar los casos de afectados que se abstengan de entrar en juicio hasta que haya revisado los documentos en cuestión. Los analistas de Chase dicen que este proceso puede tardar hasta varias semanas. Chase ha decidido cumplir con los aspectos técnicos de la ley a pesar de que los funcionarios Chase cree que la exactitud de la información de préstamos que figuran en los documentos no se verá afectada por el hecho de que el firmante empleado tenía conocimiento personal de los detalles del préstamo, o no. Aproximadamente 500.000 de los prestatarios que han utilizado Chase están 3 meses o más en mora o en ejecución de una hipoteca sobre sus préstamos.

Además de JP Morgan Chase, GMAC Mortgage y Bank of America han suspendido todas las ejecuciones en 23 estados cada uno, después de descubrir problemas similares con sus respectivos documentos de ejecución hipotecaria. Un ejecutivo de OneWest Bank admitió recientemente que ninguno de sus empleados lean los aproximadamente 6.000 documentos que firman por semana.

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Sacramento area debtors who are considering filing either Chapter 7 or Chapter 13 may be interested to know that JPMorgan Chase has decided to re-examine documents they filed on approximately 56,000 foreclosure cases. These current issues revolve around signatures obtained by employees on affidavits about loan documents that they failed to review independently.

Chase has asked the courts reviewing the affected cases to refrain from entering judgment until they have reviewed the documents in question. Analysts from Chase say this process can take up to several weeks. Chase has decided to comply with the technical aspects of the law even though Chase officials believe the accuracy of the loan information contained within the documents will be unaffected by whether the employee signer had personal knowledge of the loan details, or not. Approximately 500,000 of borrowers who have used Chase are either 3 months or more in default or in foreclosure on their loans.

In addition to JPMorgan Chase, GMAC Mortgage and Bank of America have suspended all foreclosures in 23 states each after discovering similar problems with their respective foreclosure documents. An executive from OneWest Bank recently admitted that none of her employees read the approximate 6000 documents they sign per week.

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El 9 º Circuito de los EE.UU. Corte de Apelaciones, que tiene jurisdicción sobre todos los residentes del área de Sacramento, que el Capítulo 7 o Capítulo 13 de bancarrota, dictaminó ayer que el Capítulo 7 síndico de la quiebra puede ser capaz de vender la casa de un deudor si aumenta su valor durante la quiebra, incluso aunque el patrimonio del deudor se está totalmente exenta en el momento de la presentación. El 9 º Circuito de dos llamamientos consolidados de quiebra dentro de su jurisdicción en el caso, In re Gebhart, N º 07-16769.

Los deudores de Arizona y Washington argumentaron que la omisión del capítulo 7 fiduciario para oponerse a una demanda exención en el plazo establecido pueden replicar a los resultados de la propiedad valor de la propiedad está retirando de la masa de la quiebra.

Gebhart se centra en un deudor que se acogió al Capítulo 7 en Arizona en 2003 y se cobró la totalidad del valor de su casa como exentos. El administrador asignado al caso no se opuso a la exención cuando el deudor es declarado. Sin embargo, el caso del deudor permaneció abierta y en 2006 el fiduciario intentó vender la casa como los valores de propiedad incrementará con el fin de recuperar el valor apreciado por los acreedores del deudor. El deudor pierde en el tribunal de distrito cuando él se opuso a la venta argumentando que la exención cubre la totalidad del valor de su casa cuando se acogió al Capítulo 7. Curiosamente, un tribunal de Washington con hechos casi idénticos al caso presentado en Arizona declaró que la exención original de hecho cubre el valor inceased de la casa del deudor.

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The 9th U.S. Circuit Court of Appeals, which has jurisdiction over all Sacramento area residents who file Chapter 7 or Chapter 13 bankruptcy, ruled yesterday that a Chapter 7 bankruptcy trustee may be able to sell a debtor’s house if its value increases during the bankruptcy, even though the debtor’s equity was fully exempt at the time of filing. The 9th Circuit consolidated two bankruptcy appeals within their jurisdiction in the case, In re Gebhart, No. 07-16769.

Debtors from Arizona and Washington each argued that the Chapter 7 trustee’s failure to object to a homestead exemption claim within the prescribed time frame permitted to contest the property’s value results in the property being withdrawn from the bankruptcy estate.

Gebhart focuses on a debtor who filed for Chapter 7 in Arizona in 2003 and claimed the full value of his home as exempt. The trustee assigned to the case did not object to the exemption when the debtor claimed it. However, the debtor’s case remained open and in 2006 the trustee attempted to sell the house as property values increased in order to reclaim the appreciated value for the debtor’s creditors. The debtor lost in the district court when he objected to the sale arguing the homestead exemption covered the full value of his home when he filed for Chapter 7. Oddly, a court in Washington with facts almost identical to the case filed in Arizona held that the original exemption did in fact cover the inceased value of the debtor’s home.

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Ayer, la Asamblea Estatal de California bloqueo legislación propuesta por el Senado que proteger a los propietarios contra la exclusion propietario mientras persiguiendo, al mismo tiempo, una modificación de préstamo. La legislación fue apoyada fuertemente por los grupos de interés de los consumidores y la oposición de la industria bancaria de California y los intereses empresariales.

La Asamblea rechazó SB1275 hacia el final de su sesión diaria. Si la legislación fuera aprobada por la Asamblea y firmado por el gobernador Schwarzenegger, el proyecto de ley habría exigido prestamistas institucionales a considerar una modificación de préstamo a todos los propietarios en dificultades antes de tomar la decisión de embargar la propiedad. SB1275 difiere de la legislación federal, ya que crea una causa de acción contra el prestamista, si no tienen en cuenta una modificación del préstamo antes de la decisión de excluir. En este punto la legislación federal requiere que un banco que participa en Plan Hipotecario de Obama que se abstenga de Protección contra la exclusión propietario de una casa que está tratando de negociar una modificación de préstamo. Por desgracia, estas normas son voluntarias y no tienen ramificaciones si el banco decide ejecutar la hipoteca.

Los datos estadísticos demuestran que el 10% de los propietarios de California son de 60 o más días atrasados en sus pagos hipotecarios. Este número es casi el 4% más alto que los datos recogidos en todo el país. Más de un tercio de los titulares de la hipoteca de California deben más en sus hogares que el valor de mercado de la propia casa.

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Today, the California State Assembly blocked legislation proposed by the State Senate that would protect homeowners against foreclosure while pursuing a loan modification. The legislation was heavily supported by consumer interest groups and opposed by the California banking industry and business interests.

The Assembly rejected SB1275 towards the end of their daily session. If passed by the Assembly and signed by Governor Schwarzenegger, the Bill would have required institutional lenders to consider a loan modification on all distressed homeowners before making the decision to foreclose on the property. SB1275 differs from federal legislation because it creates a cause of action against the lender if they fail to consider a loan modification before the decision to foreclose. At this point federal legislation requires a bank who participates in Obama’s Mortgage Protection Plan to refrain from foreclosing against a homeowner who is attempting to negotiate a loan modification. Unfortunately, these rules are voluntary and have no ramifications if the bank decides to foreclose.

Statistical data show that 10% of California homeowners are 60 or more days behind on their mortgage payments. This number is almost 4% higher than the data compiled for the entire country. More than a third of California’s mortgage holders owe more on their homes than the market value of the house itself.

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