All About Credit Score

A recent study released by the Woodstock Institute of Chicago shows some strange numbers about bankruptcy filings and race. Specifically, the study shows that African American bankruptcy filers choose Chapter 13 bankruptcy more frequently than their white peers.

The implications of this finding are interesting and instructive to anyone considering bankruptcy as a way of easing debt.

Chapter 13 vs. Chapter 7: What’s the Difference?

In order to understand why this study’s findings matter, it’s essential to understand the key differences between Chapter 7 and Chapter 13 bankruptcy.

• Chapter 7 bankruptcy is designed to offer filers a full discharge of eligible unsecured debt. In or

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Tags: File, File Chapter

Apparently, somebody didnt get the memo.

The Bankruptcy Court for the Eastern District of Michigan has held that creditors do have an affirmative duty to halt their pre-petition collection activities. To put a slightly finer point on it, in the Eastern District of Michigan, pre-petition garnishments of tax refunds must cease when the bankruptcy is filed. The duty is on the creditor to take action to stop garnishing:

In In re McCall-Pruitt, 281 B.R. 910 (Bankr. E.D. Mich. 2002), a creditor received a Chapter 7 debtors post-petition state income tax refund based on a pre-petition garnishment, and the debtor brought a motion for sanctions, arguing that the creditor violated the automatic stay. The Bankruptcy Court held that the creditor violated the automatic stay by accepting the tax refund.  The court reasoned that the creditor had a duty to halt all collection proceedings when the debtor filed for bankruptcy protection.  

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News reports this week announce that the U.S. Department of Justice has initiated a lawsuit against Deutsche Bank, one of the world’s largest, claiming that the institution lied to federal regulators in order to secure taxpayer-funded insurance for less-than-secure mortgages.

Here’s a look at the details and some of the underlying issues.

The Charges against Deutsche Bank

According to the lawsuit, Deutsche Bank and its subsidiary MortgageIT:

• Initiated risky mortgage loans to homebuyers. Some of these loans may have been subprime, and since their initiation, sources indicate, about a third have defaulted.
• Lied to federal regulators. While the loans themselves may have been a bad move financially, what interests prosecutors is what happens next: that Deutsche Bank allegedly lied to officials with the Federal Housing Authority (FHA) in order to secure insurance for the shoddy loans.
• Got taxpayer-backed insurance for questionable loans. Because of its reportedly false claims that it was evaluating its mortgages for default risk, Deutsche Bank managed to secure FHA funding (which comes from tax dollars) for the questionable loans.
• Required money from the government when the loans defaulted. Now, as many as 12,500 of Deutsche Bank’s loans have apparently defaulted (meaning that the homes have gone into foreclosure), leaving the government responsible for covering the losses. The m

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Tags: Bank, Deutsche Bank

Who is the Bankruptcy Trustee?

It seems that the most mysterious player to a debtor in a Chapter 7 Bankruptcy is the Trustee assigned to the case. They’re not the judge, they’re not the debtor’s or a particular creditor’s attorney… “So who is this person and what do they want from me?” is a question I have heard more than several times from clients. I will attempt to explain.

The Trustee (not a Judge) Reviews Your Bankruptcy

When a Chapter 7 Bankruptcy is filed, the Clerk of the Court assigns a Judge and a Trustee to the case. In most cases, the debtor will never have the need to interact with the Judge (this is a good thing). In all cases, the debtor will have a face to face with their Trustee one time (usually only once) for about four or five minutes. The Trustee i

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Tags: Trustee

Despite the best efforts of groups like the Better Business Bureau and the Federal Trade Commission, scammers manage to find new ways to take money from unsuspecting consumers on a regular basis. Here’s a look at one of the latest warnings that’s been posted by consumer advocates.

A New Mortgage Scam Afoot

The latest in a long line of mortgage and foreclosure “rescue” scams seems to be one that involves attempting to trick homeowners into thinking they qualify for money from a lawsuit against their lenders. According to the BBB, the scam works like this:

• An official-looking letter arrives: Victims have reportedly noted that they received a letter indicating that they were eligible to join a “joinder action suit” against certain mortgage lenders and banks. The letters

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Tags: Scammers, Scammers Loose