HSBC to maintain its freeze on foreclosures in some areas for now

The nation's 12th largest mortgage servicer and 9th largest bank informed investors last Weds. that the moratorium on foreclosures that has been in place since sometime last autumn will continue for at least a number of months before it resumes foreclosing on defaulted loans. The moratorium came about due to government probes into illegal and faulty loan practices...such as "robo-signing" as it is popularly called when their employees would blindly sign many, many documents without checking the accuracy of the alleged defaults on the loans and other deceptive practices. In April it was one of 14 mortgage companies sanctioned by the Federal Reserve Bank and the Office of Comptroller of the Currency due to their erroneous and illegal procedures. More than 43 thousand home foreclosures were initiated in 2009 -2010. Considering the state of the economy and the housing market 2011 will be yet another banner year for this lender as well as others. The Obama administration and some state authorities are pushing for fines nearing the $30 billion mark in reaction to the past abuses to delinquent borrowers by HSBC and other lenders.

Exempting proceeds from personal injury settlements in Chapter 7 or Chapter 13 bankuptcy cases

Midland Credit Management vs. Chatman, MN Court of Appeals filed 3/22/2011 is a case that reaffirms earlier decisions regarding the ability to exempt (protect) proceeds from personal injury settlements as distinguished from being able to exempt the "right of action" in personal injury matters as it pertains to bankruptcy filings.

The court followed earlier court decisions wherein they took a "plain meaning" interpretation of the statutory language and also looked at other exemption statutes that sought to exempt proceeds and payments traceable to exempt sources. Those other statutes (as opposed to one under review here which was Minn Stat. Section 550.37, subd. 22) specifically stated that for example "all money arising from any claim on account of the destruction of, or damage to, exempt property", or in another section under the statutes providing for exemptions that the "right to receive present or future payments, or payments received by the debtor" would be exempt. (Minn Stats. Sections 550.37, subd. 9 and 550.37, subd. 25). So there...the language is inclusive and is plain on it's face. The court determined that had the legislature wanted to provide the same treatment for payments received on account of personal injury that it could have provided the same or similar language in the pertinent statute. Since the legislature could have but didn't include that language the court decided that the intent was not to protect the actual payments received on account of personal injury types of funds/payments to give them exempt status and therefore, they are not exempt.

Lesson to take from this decision...and which has also been my practice for many years is that all the circumstances have to be taken into account when contemplating a bankruptcy. Exemptions are one important part of the analysis. When a client has a personal injury matter and it is of a level whereas the potential damage award is higher than what we can protect under the federal exemptions found in the Bankruptcy Code then we will most likely consider filing under the state exemptions....but ONLY IF it is an unsettled claim at the point of filing. If not...then we have to reassess as this court of appeals decision confirms the prior cases which have held that only the claim or the right to the action is exempt and not the proceeds themselves. The question I always ask is....where is this at? Has it been settled? Has pen been put to paper yet? If not, then all things being equal and we don't have other types of concerns with other assets and the way we need to exempt those to weigh in...then we are good to go. If there has been a settlement...then the funds need to be spent down or converted to exempt assets within the limitations allowed by law.

Be advised that this analysis is pertinent to Minnesota bankruptcy cases and none other. If you are in another state other rules or case law may apply.

If you've got questions and need some answers regarding issues involved in a chapter 7 or chapter 13 bankruptcy filings for either personal or small business bankruptcy cases we'd be glad to help. Please feel free to connect with my office at your convenience.

David D. Kingsbury Attorney at Law
-Bankruptcy Lawyer Kingsbury Law Office
14827 Energy Way Apple Valley, MN 55124
Tel. (952) 432-4388 Fax. (952) 432-4969

www.kingsburylawoffice.com

Judgment removal

Just got off the telephone with a client of mine from 2002. She had just done a credit check and surprised to find a judgment on her record for a debt that was included in her bankruptcy filing. She called my office all bent out of shape and yelled at my receptionist telling her that this was something we should have taken care of for her. I touched on this topic in an earlier post but will take some time to go over it now. As for the problem....we'll take care of it. I pointed out to her that we informed her in writing at the time she hired us that judgments are not removed from the record or credit reports because someone files a bankruptcy case. Of course, she didn't remember that...but that is why we lawyers hang on to every scrap of paper that is generated in a case. She has decided to hire us to perform a judgment removal for her.

First off, a person has to understand that bankruptcy takes care of debts. Judgments are simply not debts. They may seem like debts to the lay person but rather they are a legal artifice that helps judgment creditors collect their money. Typically you need a judgment to do a bank levy, wage garnishment or any of the other less commonly used methods to execute on assets in order to satisfy a judgment. Judgments then, are court orders that state that the court has made a finding after a hearing on the matter and agrees that you owe someone some money. However, and as discussed above...in and of themselves they are not in the nature of debt. Since bankruptcy removes debts and not court orders a discharge of the debt in a bankruptcy case does not serve to remove the record of the judgment.

After the bankruptcy order has been issued and the debt has been discharged in Federal court (2 different court systems here) we can then file an action in state/district court where the order on the judgment was issued and request an order removing the record of the judgment. The argument is based on the fact that the underlying debt that supported the issuance of the order for judgment is now discharged. A certified copy of the bankruptcy discharge is attached to the application for judgment removal so there are a few steps to take in terms of paperwork, serving the appropriate parties in a timely manner and noticing them regarding a hearing on the matter. In the majority of cases there is no problem getting the judgment removed without any great difficulty.

If you have debt issues or questions about bankruptcy filing in regard to either Chapter 7 or Chapter 13 bankruptcy for either individuals or small business do not hesitate to contact us.

Offices Located in Apple Valley and Rochester, MN

Direct email for Dave Kingsbury is kingsdav@aol.com

Visit our web site at www.kingsburylawoffice.com for information to common questions regarding filing bankruptcy or to download our document package if you'd like to schedule a consultation

David Kingsbury, attorney
14827 Energy Way
Apple Valley, MN 55124
(952) 432-4388
(507) 281-5255

Denny Hecker Bankruptcy Fraud

In federal court Minneapolis, MN Denny Hecker, a one-time mover/shaker and auto dealer empire Mogul in the twin cities was sentenced to 10 years in prison on 2/11/11 for bankruptcy fraud and conspiracy to commit wire fraud. The sentencing judge threw the book at him sentencing him to the maximum called for under the guidelines telling Hecker that he did not deserve a break and called him a scoundrel. Harsh words and a harsh sentence. Bad for Hecker no doubt but others can benefit from his experience. I'm hoping that his outcome will serve as a deterrent for anybody coming into the bankruptcy process with less than a full commitment to total disclosure and candor with the court as well as with their attorney. Lately whenever I've got someone consulting with me about a bankruptcy case and they either outright come out and ask me how to "game" the system or I get the sense that they aren't being totally candid with me I've pulled out the example of Mr. Hecker as good reason for being "honor bright" and truthful with all things in regard to their bankruptcy filing. It isn't worth it to try and hoodwink the court. You can lose your discharge as Mr. Hecker did...plus he still has to pay all the debt and he's spending the next decade in federal prison. That's not a typical result but he's an example that people can and actually do go to jail for bankruptcy fraud. It appears that he was his own worst enemy as he couldn't process the fact that he wasn't fooling anyone anymore. That failure and his continued contempt for the bankruptcy process led to the harshness of his sentence. Word to the wise...full disclosure and play by the rules. There are many benefits in bankruptcy for debtors but some stiff penalties for dishonest debtors. For my own practice...if I get the sense that someone isn't coming completely clean with me about their circumstances I give them a pass. I don't want their case and I won't be involved in it. There are too many other honest people out there who need my help.

If you've got questions about the bankruptcy process in Chapter 7 or Chapter 13 for individuals or small business we'd be glad to help. Connect with us at www.kingburylawoffice.com

Dave Kingsbury

Debt buyers on a suing spree

I talk with a lot of people who presume that when a lender/bank/credit card company has informed them that the debt they owe has been "charged off" that they no longer owe the money and they, therefore, have nothing to worry about. Nothing could be further from the truth as there are collection firms that buy old debt for pennies on the dollar and hire outside counsel to collect and to sue on the debt. That practice has soared in the past 3 years as there has been a spate of bad loans and unpaid credit card accounts...which makes the debt for those accounts cheaper and cheaper to buy for those who specialize in this kind of market. It's estimated that outstanding debt on credit cards alone is in the neighborhood of $1.9 TRILLION dollars for 2007...back in the 90's it was in the neighborhood of $475 billion. Not an insubstantial figure in the 90's but an explosion of debt in most recent years. A consequence of the bad economy no doubt has lead to a plethora of loans and accounts gone bad. It's estimated that $3.2 trillion in consumer debt of all types has been written off since 9/07. For the debt buyers and debt collectors opportunity knocks! Most of the collection lawsuits are small claims or conciliation court matters where most defendants don't show and lose by default. Sometimes they aren't even aware of the lawsuit and many of the affidavits filed by the collectors aren't property verified as required by law.

The good news.......even if you've been sued and there are judgments against you is that if the debt was a debt that was dischargeable in nature in bankruptcy prior to acquiring judgment status we can still get rid of that debt for you in a bankruptcy case. There is a bit more to do after the bankruptcy case is discharged in order to remove the record of the judgment from the judgment roll in the court of record that had docketed the judgment. That's advisable because even if the debt is discharged the record of the judgment still survives and often appears on a person's credit report although the debt is now gone and truly uncollectible. Unfortunately anyone looking at your credit later will still see the judgment listed and can only assume it is left unpaid or unsatisfied. That, of course, is an impediment to acquiring new credit at reasonable rates, if at all. Most bankruptcy clients will hire us to perform the judgment removal service for them as well. Best case scenario is, of course, to come and see us before judgments are entered against you to avoid the additional expense and time involved in that process.

If you've got debt issues and think you may need to file a bankruptcy we've got answers.

David D. Kingsbury Attorney at Law-Bankruptcy Lawyer
Kingsbury Law Office
14827 Energy Way Apple Valley, MN 55124
Tel. (952) 432-4388 Fax. (952) 432-4969

www.kingsburylawoffice.com

Credit Counseling

A lot of people can benefit from credit counseling services. Hopefully you can ferret out which one is a good one from the vast array of credit counseling companies who purport they are there to help you but in reality are interested really in lining their own pockets. I found a good article on line on some questions you should ask when considering using one of these companies to help you.

http://www.foxbusiness.com/personal-finance/2010/09/28/questions-help-right-credit-counselor/?cmpid=partner_aol

Good luck and remember....if you have questions or a need for an experienced bankruptcy lawyer we are here to help.

www.kingsburylawoffice.com

Consumer bankruptcy filings up...Again

Recent statistics reflect that consumer bankruptcy filings in the first 6 months of 2010 totaled 770,117. That is a 14 % increase over last year for the same period and as a matter of fact is the highest total since the Bankruptcy Abuse Prevention and Consumer Protection Act (so-called) was passed in 2005 in an attempt to decrease the amount of bankruptcy filings. Typical government reaction to a problem....try to put a bandaid on something to make it look good instead of making real attempts to resolve the problems that push people into bankruptcy like high unemployment, high medical costs and low rates of insurance, predatory lenders and credit card issuers, etc. Since then we've had some efforts at reigning in the mortgage companies and the credit card issuers.....hopefully it will help. Unfortunately the housing market collapse and the attendant high unemployment are factors that will be around and impacting the American economy for some time to come.

For information on consumer and small business bankruptcy in Minnesota please connect with us at www.kingsburylawoffice.com