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This blog is updated by San Diego Bankruptcy Law Firm. The blog is designed to educate consumers about their rights under the Bankruptcy Code.

Bankruptcy can STOP FORECLOSURE, ELIMINATE DEBT AND PROTECT YOUR ASSETS! Call us for a free consultation at 877-GOBK619 or 619-260-1800. Visit us at

We are a debt relief agency and help people file for Bankruptcy under the Bankruptcy Code.

Wednesday, September 28, 2011

Bill to Improve U.S. Trustee’s Power To Protect Homeowners in Bankruptcy Revealed

by Elizabeth Brennon on Sep 23, 2011
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Just last year, more than one million Americans lost homes to foreclosure, and the foreclosure crisis is only expected to worsen. Distressed homeowners facing bankruptcy and foreclosure deserve to be treated fairly. Banks should not attempt to profit from these hard times with improper mortgage fees and other types of fraud. Apparently, however, this is exactly what may have been happening.

The United States Trustee Program and Executive Office of the U.S. Bankruptcy Trustee (EOUST) are part of the Department of Justice. The U.S. trustee oversees the administration of federal bankruptcy cases and works to protect the integrity of the system. Recently, EOUST reviewed 10,000 proofs of claim filed with bankruptcy courts by mortgagees or mortgage servicers.

Errors found in the claims included mortgage servicers charging unsubstantiated fees, overstating the amount homeowners owe on properties, and providing inadequate documentation to the bankruptcy court.

The U.S. trustee discovered that the errors in claims submitted by mortgage providers were both more serious and more frequent than the mortgage servicing industry previously asserted. Specifically, mortgage servicers claimed such errors occurred in less than one percent of bankruptcy cases. EOUST, however, discovered errors were occurring at 10 times that rate.

Although the U.S. Trustee Program attempted to combat these patterns of defective and fraudulent filings, those efforts have been slowed by legal challenges to the trustee’s power and authority to take such actions. Mortgage servicers are challenging the trustee’s ability to act on bankruptcy filers’ behalf by asking for additional documents or requesting sanctions for incorrect or fraudulent filings. Essentially mortgage servicers don’t believe the U.S. Trustee has the power to hold them accountable for their actions.

The Fighting Fraud in Bankruptcy Act

These legal challenges by mortgage servicers prompted three Senators, Patrick Leahy (D-Vt), Richard Blumenthal (D-Conn.), and Sheldon Whitehouse (D-R.I.) to sponsor legislation to strengthen and clarify the U.S. Trustee’s power to protect homeowners in the bankruptcy system from fraud. In late May the Fighting Fraud in Bankruptcy Act of 2011 (S. 1054) was introduced on the Senate floor, and the bill has now been referred to committee.

Senator Leahy explained the importance of the bill this way: “As Congress looks at ways to mitigate the foreclosure crisis to reduce its impact on homeowners and the economy, I hope all Senators can agree that the foreclosure process for Americans should be a fair one and one in which there is accountability for fraud or other misconduct. And I hope we can all agree that the integrity of our judicial system is something worth protecting.”

The Fighting Fraud in Bankruptcy Act has four main goals. First and foremost, it clarifies that the U.S. Trustee has the power and duty to take action when abuse of the bankruptcy process by creditors is detected.

In conjunction with this power, the Act authorizes the trustee to conduct audits and investigations to confirm creditors are acting in accordance with the law. If fraud or misconduct is detected, the Act allows the bankruptcy court to correct errors or impose sanctions for misconduct. These actions can be taken in response to a motion by the trustee, or the bankruptcy court may make its own motion.

Finally, the Act mandates that mortgage servicers certify under penalty of perjury that foreclosure actions against deployed and active duty military homeowners comply with the Servicemembers Civil Relief Act (SCRA). The SCRA serves to protect those in the military by staying foreclosure actions if they are currently deployed, and requiring manageable and stable interest rates for military servicemembers. A report by the Government Accountability Office (GAO) found that among only two of the 14 large mortgage servicing organizations that supplied data to regulators, 50 foreclosure cases violated the protections of the SCRA.

If the Fighting Fraud in Bankruptcy Act passes into law it will hopefully clarify and strengthen the U.S. Trustee Program’s power to remedy creditor abuse. This may prevent mortgage servicers from unfairly profiting from homeowners facing bankruptcy and foreclosure by submitting incorrect or fraudulent claims.

If you are overwhelmed by debt, or struggling to keep your home, contact an experienced personal bankruptcy and foreclosure attorney. A knowledgeable lawyer will work to protect your rights and advocate on your behalf throughout any bankruptcy or foreclosure proceedings.

Number of college grads who end up filing for bankruptcy jumps 20% over past five years: report

Wednesday, September 14, 2011

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These days, book smarts may not add up to financial success.

The number of bankruptcy filers who have college degrees has swelled more than 20% over the past five years as the impact of the economic downturn broadens, a new study showed.

Those with just a high school diploma still account for the biggest proportion of bankruptcy filers, making up more than a third of them, according to a report by the Institute for Financial Literacy.

But bankruptcy filers with college diplomas climbed to 13.6% in 2010 from 11.2% in 2006. Those with an associate's or graduate degree also climbed, while those with just a high school diploma slipped.

"There's this mythology out there that if you go to college and you get a degree, you're going to do financially better," said Leslie Linfield, the institute's executive director. "I think this data is starting to erode at this myth."

Last year, personal bankruptcies rose to 1.5 million, according to government data.

While bankruptcy filers are becoming better educated, they're also increasingly well-heeled. The percentage of filers making more than $60,000 jumped 66% in the past five years, the survey showed.

Linfield pegged the trend largely on big losses in white-collar jobs. More consumers surveyed blamed a reduction of income or job loss as a reason for their financial distress.

Still, the biggest reason for their money problems remained being overextended on credit - more than 70% of filers gave that as the main cause.

A particularly worrisome trend, Linfield said, is that bankruptcy filers are aging. Consumers aged 45 to 54 made up the highest proportion of them in 2010, a shift from the prior year, when those aged 35 to 44 held the top spot.

That could leave many older Americans in a tight financial spot as they approach retirement.

"At 54, do they really have enough time in front of them to start over?" Linfield said. "They are at risk."

The group surveyed more than 50,000 debtors in credit counseling or money management courses.

Monday, September 26, 2011

Marriage, College, Job Won’t Ward Off Bankruptcy

September 13, 2011, 3:15 PM ET
Associated Press
By Eric Morath
Link to Article:

A wedding ring, college degree and a well-paying job: the American dream or a recipe for bankruptcy?

Some of the factors often associated with financial success are increasingly becoming correlated with personal bankruptcy filings, a study released Tuesday by the Institute for Financial Literacy found.

The study found that from 2006 to 2010, bankruptcy filings increased among college graduates and those earning $60,000 a year or more. What’s more, last year, 64% of bankruptcy filers surveyed were married—a number that also increased from five years ago.

“The Great Recession has had a dramatic impact on the bankruptcy filings of American consumers across the economic spectrum—including college educated, high income earners,” said Leslie E. Linfield, executive director the institute. “While less educated, low income individuals continue to represent the typical bankruptcy filer, this report underscores sophisticated evolution of the profile of the American debtor that now extends to disparate age, income and ethnic groups.”

The survey collected responses from some 50,000 of individuals that filed for bankruptcy in the past five years. All respondents had sought credit counseling.

The study found that those holding a bachelor’s degree accounted for 13.58% of filings last year, up from 11.2% in 2006—a 21% increase. Those holding high school degrees still accounted for the largest percentage of filers, 36.27%, but their proportion of all filers fell by 8.6%.

Those most at risk for a bankruptcy filing were individuals who attended college but did not complete a degree, the study said. They accounted for 28.7% of filings last year.

“This we suspect is because they have all the burdens of school related debt and none of the rewards of an actual degree,” the study said.

While those earning less than $20,000 per year accounted for nearly 40% of all filings, higher-income earners saw their ranks grow in the past five years, the study found.

Those earning $60,000 or more accounted for 9.2% of all filings last years, up from 5.5% in 2006, a 67% increase.

The study found that the number of filers who were married jumped above 60% in the past five years, from 57.2% in 2006. That out paces the 50.3% of U.S. adults that are married, according to the Census.

Based in Maine, the Institute for Financial Literacy is a nonprofit organization that promotes effective financial education and counseling.

Renting to the Foreclosed

Renting to the Foreclosed

By Marilyn Kennedy Melia

Published September 26, 2011 |

Article link:

Investors are buying foreclosed single-family homes and renting them out -- and they often rent them to families who have lost homes to foreclosure.

"Families that have gotten used to single-family property living typically prefer renting a home as opposed to an apartment," says Evan Gentry, president and CEO of G8 Capital, a Ladera Ranch, Calif., private equity fund that has bought 3,000 homes, leasing many to renters.

Investors -- individuals and large-scale funds -- are buying with the aim of offering the houses for rent because selling at a quick profit isn't possible.

Families who have been through foreclosure are not alone in preferring a backyard to an apartment courtyard, says Claire Williams, 2011 president of the Michigan Association of Realtors. "Transferees are looking to rent the home they've left and rent another where they're relocating. They don't want to sell because of the decline in values," Williams says.
Finding Properties

Neighborhoods that have been hit hard by foreclosure or big price drops are especially likely to have single-family homes for rent, says Mike Bowman, owner of Century 21 Mike Bowman, in Dallas.

Moreover, there could be an increase in single-family homes for rent. In August, the Obama administration called for studying how homes owned by Fannie Mae and Freddie Mac could be rented.

One idea being studied, says Josh Fuhrman, senior vice president of the nonprofit Homeownership Preservation Foundation, is for banks to acquire a property and quickly sell to an investor who could then rent it out -- possibly to the family who never left the house, even after foreclosure proceedings began.

Many of the current homes for rent are managed and listed by real estate firms, Bowman says. Additionally, the same channels that list apartments, such as, are likely to advertise homes for rent, says Aaron Murray, vice president of G8Capital.
Meeting Landlords' Requirements

Investors buying vacant properties often know families recovering from foreclosure are a significant force in the market, and many have adjusted their requirements for eligible tenants. "A careful review of someone's credit history can often help landlords determine the difference between someone caught upside down on a home or who had a temporary job loss versus someone who has a long history of late or nonpayments," Murray says.

Bowman says he advises renters to prepare a letter explaining the circumstances that led to foreclosure and how they have recovered financially.

Some landlords "still insist on a credit score of 720," says Williams. But in some areas, she says, landlords realize the market demands more flexible standards.
Setting Rent Rates

With today's low mortgage interest rates, it's possible foreclosed families could pay more in rent than someone with good credit and cash for a down payment would pay for his or her monthly mortgage payment, says Christopher Thornberg, founding principal of Beacon Economics, a Los Angeles real estate and economic consulting firm.

Many families, not just those who have been through foreclosure, says Williams, find that renting is the only financially viable option for them -- either because they can't sell a former home, have poor credit or fear further home price declines.
Planning to Purchase?

When house prices stabilize, Gentry says, their firm and others might offer plans for renters to buy the houses they occupy.

One such method, called "lease option to buy," involves charging a renter a premium on top of the regular rent rate. The premium, which may be $100 or more monthly, guarantees the renter can buy the home at a certain price at a certain date -- for example, two years after the contract is signed.

Another method is the "contract purchase" whereby the renter pays the investor holding the house a mortgage payment for a few years, with the agreement that in a certain number of years, such as three or four, the renter will get a mortgage from a regular lender and be able to assume ownership from the investor. The mortgage payments paid during the contract period are used to reduce the purchase price when the renter gets regular financing.

"It depends on individual circumstances whether these plans will work for the family," says Barry Zigas, housing analyst for the Consumer Federation of America.

For one thing, "people often misjudge that they'll be in a house for a certain amount of time. In this volatile job market, you could find you need to move," Zigas says. He believes individuals are in a poor position to predict what house prices will be.

Moreover, he likes to see part of the premium on a lease option contract to be put in escrow, allowing the money to be used toward the down payment on the purchase.

Individuals should call a housing counselor, says Fuhrman, to analyze whether these purchase plans are viable for them.

Wednesday, September 21, 2011

Medical Bills, Debt Sends Many into Bankruptcy

By Cynthia Hsu on August 31, 2011 8:46 AM

Link to article:

What would you do if you were saddled with high medical bill debt? Would you declare bankruptcy? With the rising cost of healthcare, it seems that high medical bills and bankruptcy are starting to go hand-in-hand.

About 20% of Americans cite medical bills as the reason behind their bankruptcy when they seek financial consulting, according to a recent study by CredAbility.

This is an increase from just a few years ago, when about 12-13% of Americans cited medical debt as the reason behind their bankruptcy, according to The New York Times.

Why? With the rough economy, more Americans have gone through periods of unemployment, leaving gaps in their medical insurance coverage.

Plus, Americans who purchase insurance themselves might opt for cheaper plans with lower premiums in an effort to save money.

Lower premiums, however, often mean that there are high deductibles, making consumers more vulnerable to incurring high costs before their insurance kicks in, The New York Times reports.

It also seems medical debt is simply the kind of debt that Americans feel obligated to pay off. Some might even turn to opening up a new credit card, according to The New York Times.

This, unfortunately, may only lead to more debt.

Is bankruptcy right for consumers who are weighed down by medical bill debts?

It could be, but consumers should do their due diligence and carefully research their options before considering bankruptcy. There are alternatives, such as debt management plans that allow credit card holders to pay off their debt over a set period, reports The New York Times.

And, consumers looking to erase their medical bill debt through bankruptcy will need to figure out which bankruptcy is right for them. Is it Chapter 7, which erases many debts but may liquidate a consumer's assets? Or Chapter 13? Consulting an attorney to discuss your medical bills and bankruptcy might be a prudent option, as bankruptcy law is complicated and can be difficult to navigate without some expert guidance.

Tuesday, September 20, 2011

If you are facing foreclosure, San Diego Bankruptcy Law Firm can help protect your home.

It is common for people to fall behind on their mortgage payments. If you find yourself in this position, there are ways you can find relief.

Filing for bankruptcy can delay foreclosure.

When a person files for Chapter 13 or Chapter 7 bankruptcy, they usually receive immediate protection from creditors through a special court order known as an “automatic stay”. This means creditors must immediately stop their collection attempts.

If a foreclosure sale has been scheduled for your home, it will be postponed until the bankruptcy is finalized. Sometimes there are exceptions to this rule, so it is important to contact San Diego Bankruptcy Law Firm so we may discuss all of your options. Your initial consultation is free.

Filing for Chapter 13 bankruptcy can help you avoid foreclosure and keep you in your home. Chapter 13 bankruptcy allows you to set up a repayment plan to pay off the past due payments.

A short sale can stop foreclosure.

It is important to remember a short sale can stop foreclosure, but it also has serious tax and credit consequences. In addition, some lenders and mortgage companies will refuse to do a short sale. Filing for bankruptcy can help you keep your house.

A short sale is when lender agrees to take less than the total amount owed on the loan in a voluntary sale to a third party. But a short sale is anything but short—it is usually a very lengthy and complex process.

Contact San Diego Bankruptcy Law Firm to help you through this process or negotiate a short sale settlement.

San Diego default filings surge in August

San Diego default filings surge in August
The month-to-month increase was largely due to two major banks

By Lily Leung, Reporter - Real estate

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Monday, September 19, 2011 at 12:56 p.m.

SAN DIEGO COUNTY — The number of default notices, the first step in the foreclosure process, ballooned in August, largely due to activity from Bank of New York Mellon and Bank of America, figures from La Jolla-based DataQuick show.

Bank of New York Mellon filings in San Diego County increased from 76 in July to 403 in August, or 430 percent. Meanwhile, Bank of America pushed through more than two times as many defaults during that same time period.

The two lenders, known as beneficiaries in public records, accounted for the bulk of the county’s most recent month-to-month increase. Notices rose from 1,274 in July to 2,094 in August, or 64.4 percent. That’s the largest month-to-month percentage increase since December 2008.

Similar jumps were evident throughout the state, including Los Angeles and Orange counties.

"It appears they're working through their backlogs of delinquent loans," said DataQuick analyst Andrew LePage. "But why and why all of a sudden. It's not clear."

In a statement, Bank of America spokeswoman Jumana Bauwens said the company has been seeing "continued increases" in foreclosure referrals in several parts of the U.S. due to the backlog of foreclosures that were on hold in late 2010 and early 2011.

What does August's sudden upsurge in default notices mean for county home values?

That also is unclear, said LePage of DataQuick.

"We don't know the magnitude and duration" of filings in the months ahead, he said.

The number of trustee deeds, which signal a foreclosure, also increased last month. There were 835 foreclosures in August, up 4.6 percent from July.