In Part 1 of my two-part series discussing the issue of filing for bankruptcy after a previous bankruptcy had been filed, I mentioned “disposable monthly income” in the context of Chapter 13 bankruptcy and told you that this post would discuss it in detail.  This isn’t the first time I have promised to discuss this topic.  I have put it off because of the somewhat esoteric, indeed recondite, dare I even say arcane, nature of the subject.  However, there have been some very recent developments in the case law on “disposable monthly income” that make it ripe for discussion.  Therefore, this post makes good on my promises.
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I will be covering the topics of “Chapter 13: Vehicle and Mortgage Complications” and “Formulating a Confirmable Chapter 13 Plan” at the “Complex Bankruptcy Issues” seminar for the National Business Institute on May 2, 2012 in Orange, California.  This presentation will cover such thorny issues as 910 car claims, rescission and second mortgages,  detail how

This post gathers my thoughts on three eye openers.  Some were in the news, and some I experienced first-hand in my bankruptcy practice.  The common thread among these eye openers is a profound threat to the freedom and wellbeing of the citizenry.

I.          Debt Collector Abuses

A.        Whole Lotta Collectin’ Goin’ On

In the February 16, 2012 Los Angeles Times, Jim Puzzanghera reported on the recently formed Consumer Financial Protection Bureau and noted:

Debt collection has been second only to identity theft in consumer complaints to the Federal Trade Commission in recent years. The bureau estimated that 30 million Americans have debts in the collection process.

Thirty million!  Wow!  That’s one-tenth of the entire U.S. population.  So it’s not just my clients who are facing debt collection agencies and their corrupt and abusive tactics.  And given the volume of complaints it appears that abuses by debt collectors are widespread – it’s not just a few bad apples.
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I.          Loan Modifications:  The New Scam On America

In the January 20, 2012 issue of the Wall Street Journal’s Market Watch, Lew Sichelman shared a few of the many letters he received from homeowners detailing their nightmarish experiences in trying – unsuccessfully – to modify their mortgages.  Take a look at the stories and know that they are being repeated thousands of time a day all over the country.

Those of you familiar with this blog know that I have written posts about loan modification before.  My take on the process has been quite cynical because of what I’ve seen in my bankruptcy practice.

Apparently, the problems I’ve seen in the Central District of California are mirrored throughout the nation.  
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Bankruptcy filings should surge in 2012 because the foreclosure pace is picking up speed, and because the world and U.S. economies are not headed for improvement in the near future.

I.          Foreclosures In 2012

I haven’t written about foreclosure in a while, but an article in the Thursday Los Angeles Times has given me the impetus to do so.

In the January 12, 2012 Business Section, E. Scott Reckard reported:

California and other states are likely to see an enormous wave of long-delayed foreclosure action in the coming year as banks deal more aggressively with 3.5 million seriously delinquent mortgages.  And experts said that dealing with the foreclosure process, from issuing notices of default to selling repossessed homes, is likely to push housing prices lower this year before the real estate market has a chance to recover.

Wow!  Three and a half million seriously delinquent mortgages.  That’s a lot of toxic real estate.  If you’re one of those 3.5 million people with a seriously delinquent mortgage, isn’t it time you considered bankruptcy?

II.        The World Economy

Is that the only bad financial news?  You know better than that.  Here’s what Sue Chang of the Wall Street Journal’s Market Watch reported on Friday, January 13, 2012:

Standard & Poor’s late Friday stripped France and Austria of their triple-A ratings and also downgraded Spain, Italy, and Portugal.  France and Austria are now both rated AA+ while Spain is at A and Italy is rated BBB+.  Meanwhile, Portugal’s rating was slashed to a junk grade of BB.  The move had been anticipated after the ratings agency placed 15 euro-zone countries on CreditWatch negative in early December.
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A fellow attorney recently asked me this question because she had a client who failed to attend the reaffirmation hearing.  As a result, the judge disapproved the reaffirmation agreement.  She wondered if the creditor could now repossess the car.  The short answer is: Yes.  What’s going on here?

I.          To Reaffirm Or Not To Reaffirm,

A fellow bankruptcy attorney recently asked me this question in the context of a Chapter 13 bankruptcy.  He had filed the case for the husband alone pursuant to 11 U.S.C. § 301 , and due to changed circumstances decided that it would be a good idea to make the case a joint case pursuant to § 302.  He wanted to know if it was sufficient to simply amend the Voluntary Petition to add the wife.

It may surprise you to learn that the answer is, “No.”  While there is a way to accomplish the desired goal, it’s a bit more complicated than simply amending the Voluntary Petition.
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