Tag: Chapter 7

Law Review: Cohen, Lawless and Shin- Opposite of Correct: Inverted Insider Perceptions of Race and Bankruptcy

Abstract:

Previous data collected during the 2007 meltdown of the subprime mortgage market showed that African Americans were approximately twice as likely to file chapter 13 bankruptcy than persons of other races, a significant policy issue given the generally less generous rules in chapter 13. We first update and replicate these findings with new data collected during 2013 2014 as the housing market recovered. Results of the original study were not specific to the subprime crisis as the new data showed the same 2:1 racial disparity as the older data, suggesting that this disparity may be a relatively enduring part of the U.S.… Read More

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Law Review: Lindblad, Quercia, Jacoby, Wang & Zhao- Bankruptcy During Foreclosure: Home Preservation through Chapter 7 and 13

Abstract:

Filing for bankruptcy is the primary legal mechanism by which homeowners in foreclosure can exert control over ownership of their home, yet little is known about the interplay between bankruptcy chapters, mortgage servicers, state foreclosure laws, and home foreclosure auctions. We analyze 4,280 lower-income homeowners in the United States who were more than 90 days late paying their 30-year fixed-rate mortgages. Two dozen organizations serviced these mortgages and initiated foreclosure between 2003 and 2012. We identify wide variation between mortgage servicers in their likelihood of bringing the property to auction. We also show that when homeowners in foreclosure filed for bankruptcy, foreclosure auctions were 70% less likely.… Read More

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4th Circuit: Branigan v. Davis (In re Davis)- Strip-off of Unsecured Mortgages and Chapter 20

Summary:

As an initial matter, the 4th Circuit affirmed, in a published opinion, that pursuant to 11 U.S.C. §§ 506(a) and 1322(b)(2), a junior lien against real estate that serves as the debtor’s principal residence can be stripped-off if there is no equity above the senior lien(s).

The Court of Appeals next proceeded to the question of whether a Debtor, who had recently obtained and Chapter 7 discharge and was thus ineligible for a Chapter 13 discharge, could similarly strip-off a junior lien. The Chapter 13 Trustee argued that lien-stripping was contingent on receipt of a dsicahrge, as 11 U.S.C. § 132(a)(5)(B)(i)(I) provides that a lien is retained until either the underlying debt is paid or a discharge is granted.… Read More

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E.D.N.C.: In re TP, Inc.- Involuntary Conversion of Chapter 11 to Chapter 7

Summary:

Conversion from Chapter 11 to Chapter 7 is governed by 11 U.S.C. § 1112(b), based on the best interest of the creditors and estate for cause, including:

(A) substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation;
(B) gross mismanagement of the estate;
(C) failure to maintain appropriate insurance that poses a risk to the estate or to the public;
(D) unauthorized use of cash collateral substantially harmful to one or more creditors;
(E) failure to comply with an order of the court;
(F) unexcused failure to satisfy timely any filing or reporting requirement established by this title or by any rule applicable to a case under this chapter;
(G) failure to attend the meeting of creditors convened under section 341(a) or an examination ordered under rule 2004 of the Federal Rules of Bankruptcy Procedure without good cause shown by the debtor;
(H) failure timely to provide information or attend meetings reasonably requested by the United States Trustee (or the bankruptcy adminstratot, if any)
(I) failure timely to pay taxes owed after the date of the order for relief or to file tax returns due after the date of the order for relief;
(J) failure to file a disclosure statement, or to file or confirm a plan, within the time fixed by this title or by order of the court;
(K) failure to pay any fees or charges required under chapter 123 of title 28;
(L) failure to file a disclosure statement, or to file or confirm a plan, within the time fixed by this title or by order of the court;
(M) inability to effectuate substantial consummation of a confirmed plan;
(N) material default by the debtor with respect to a confirmed plan;
(O) termination of a confirmed plan by reason of the occurrence of a condition specified in the plan; and
(P) failure of the debtor to pay any domestic support obligation that first becomes payable after the date of the filing of the petition.… Read More

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Bankr. M.D.N.C.: In re Abdelaziz- Denial of Discharge under 11 U.S.C. § 727(a)(2) for concealment of assets

Summary:

The Debtor’s corporation filed Chapter 7 and the Debtor agreed to buy the assets of the corporation from the Chapter 7 Trustee for $3,400.00.  The Trustee was later contacted by an auctioneer, who informed the Trustee that the Debtor was attempting to sell additional corporate assets, that had not be listed in the bankruptcy petition filed by the corporation.  The Debtor eventually did sell these non-disclosed assets for $4,000.00 and also filed his own personal Chapter 7 bankruptcy, with the same Trustee being appointed.  The Trustee eventually settled with the Debtor for an additional $2,300.00, but then brought an adversary proceeding to deny the Debtor his discharge pursuant to 11 U.S.C.… Read More

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Broke: Porter, Katherine- Chapter One: Driven By Debt: Bankruptcy and Financial Failure in America

Summary and Commentary:

Starting by painting a vivid tableau of a §341 Meeting of Creditors, its atmosphere is aptly compared with the anxiety of an emergency room.  The metaphor  gets pushed too far,  with the Trustee being likened to a doctor diagnosing people “with a financial emergency- bankruptcy.”  This would be a fully congruent comparison only if, and I hesitate to extend this metaphor, because most Trustees are truly good and caring people, who keep a debtor’s interest in mind, if not at heart, a medical doctor was charged by his Hippocratic Oath to first do no harm to the viruses, tumors and injuries the patient suffers from. … Read More

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Book: Katherine Porter , Editor- Broke: How Debt Bankrupts the Middle Class

Description:

About 1.5 million households filed bankruptcy in the last year, making bankruptcy as common as college graduation and divorce. The recession has pushed more and more families into financial collapse—with unemployment, declines in retirement wealth, and falling house values destabilizing the American middle class. Broke explores the consequences of this unprecedented growth in consumer debt and shows how excessive borrowing undermines the prosperity of middle class America.

While the recession that began in mid-2007 has widened the scope of the financial pain caused by over-indebtedness, the problem predated that large-scale economic meltdown. And by all indicators, consumer debt will be a defining feature of middle-class families for years to come.… Read More

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