The jobless recovery is a reality - this scene of people standing in line for unemployment benefits is bound to repeat.

July 4, 2010 – This morning on This Week on ABC one of the big topics was the “Jobless Recovery.”  Finally the media is acknowledging that any recovery that may exist (I dispute that we are in recovery) is  a jobless recovery.  There was the temporary jump in new jobs in April which turned out to be the census takers and of course those jobs did not last.  The show also acknowledged that there will be a double dip recession.  I think either we are already in the second dip or it is coming very soon.

I have been saying for quite some time that any recovery will be a jobless recovery.  I feel vindicated.  The lesson to learn from this is that the powers at be do not care about us will lie to make themselves look good until we do not buy their statements anymore.   If you think you will find a new job soon think twice.  This may be a good time to file bankruptcy when your means test 6 month income will be at the lowest as someone who is unemployed.  Also do not expect a new job soon or if you are lucky enough to get a new job it will probably pay less and be without benefits.  Chapter 13 is also available as a good way to save your house from foreclosure and save cars from repossession.

Banks violate the automatic stay when they require you to pay past debts in order to open an account.

June 29, 2010 – Today Judge Isgur of the Southern District of Texas suggested that banks may be violating the automatic stay when they require payment of overdrafts or other debts in order to open an account.  He stated that this is a frequent occurrence in his court that debtors are required to pay these balances.  He did not make a definite ruling but invited the debtor in a case to file a stay violation lawsuit.

The thing to do is to tell the bank that they are violating the automatic stay, ask for a supervisor, and most importantly ask them to put it in writing then go to your bankruptcy attorney and file the lawsuit.  If we as debtors’ counsels get more aggressive the banks will change their behavior.  This case involved First Convenience Bank which I recommend clients to avoid because I think they are predatory when it comes to overdraft fees and authorize debit card purchases when there is no money in the account only to charge a $30 plus overdraft fee and let the consumer run up hundreds of  dollars before they stop.

Moving from one state to another sometimes means that you still pack with you the laws of the old state.

Most bankruptcy judges will let you claim the federal bankruptcy code exemptions to keep your property in Chapter 7, even if you moved to Texas less than two years ago from a state that does not allow you to use these exemptions.  The reason for this rule is that most of the states that have opted out from the relatively generous federal bankruptcy exemptions have limited their opt-out law to its own residents.  A concern however is that a growing minority of judges are ruling that regardless of explicit residency restrictions the old state’s exemption laws apply.   This means that if you move from another state to Texas less than two years before filing that state’s law applies and if you lived in more than one state during these two years then it is the state where you lived the majority or greater part during the 180 days before the two years that applies.   This may sound complicated, but I do this analysis all the time as many of my clients have recently moved from out of state.

Attached is an opinion from Judge Marvin Isgur that is an example of this troubling trend.  The solution is to get a bankruptcy attorney who does not mind anaylizing your rights under another state’s law in case you end up with a judge who takes this position.  I have found though that most of the time there is little resistance to claiming the federal bankruptcy exemptions, but in cases where there is a lot of property caution should be exercised in case you end up with a judge that takes this position.

Opinion holding that prior state’s laws apply

Do go and get high speed internet because it is deductible in the means test as a telecommunications expense. Anything above basic phone service that is necessary for you or your family’s health or welfare is deductible. Broadband is important to use for job search and dial up internet is too slow for most uses these days. Additionally with dial up only one computer can be on the internet at the same time. If you get a wireless router for about forty dollars then you and your spouse can be working on job searching on two different computers while your kids are doing there homework from school online on theirs all at the same time. Become part of the 21st Century telecommunications revolution and deduct it on the means test.

That was the bad news your health insurance premiums will go up, but they good news is that they are still deductible in bankruptcy in the means test. In Chapter 7 you can buy health insurance right before filing or if your premiums go up under both situations and still deduct the new higher amount in the means test. For those in Chapter 13 you can even buy it after you file and count the increased amount as an expense deduction.

Here are the six options available for handling secured collateral in Chapter 7:

1. Surrender – This option is nice if you just want to walk away and owe nothing, but obviously could be a problem for those that want to keep it. Most lenders will repossess the car after discharge if you are not current, but if you are lucky they will never formally demand it or try to pick it up.
My experience is that lenders never formally demand possession they just send out crooked repo men to pick it up. You do not have to give your vehicle to a stranger. Only in smaller counties including Brazoria have I seen them get a court order for possession and sent out the Sheriff or Constable, but in the rare event that they do you do have to surrender the car to a law enforcement officer. How do you know that the tow truck driver is not an impostor with a tow truck? Many of them have felony convictions. Adding insult to injury these people often pretend to be law enforcement using titles like Seregeant or Investigator. They will claim they are investigating a “theft” “civil theft.”. This is a scam on their part. Ask to have the name and telephone number of their supervisor.
They cannot take the car if there is a passenger in it and in Texas they cannot cause a breach of the peace so they cannot break into your garage but they may pick it up from your driveway.
If this does not appeal to you then read the other options!

2. Redeem – Is a great option if you are upside down on a secured personal property. You pay a lump sum equal to the value of the collateral from yourself or anybody or get a loan from Redemption Funding Inc in Sweetwater, Tennessee (423) 337-7572. This works best for upside down loans. The interest rate will be higher, but it’s worth it if you save enough money. The application is on my website at www.sabkr.com/redemption.htm

3. Reaffirm – This choice is bittersweet because you are giving up the discharge of that particular debt in your bankruptcy. Lenders will try to coerce you into this option. They say they require reaffirmations but most do not enforce it. The bankruptcy code does say that if you fail to redeem or reaffirm within a certain time then the automatic stay lifts and they are free to pursue a bankruptcy default clause.

4. Reaffirm and Rescind – You have the right to rescind a reaffirmation agreement anytime before discharge or within 60 days whichever is later. Although the courts have not authoritatively stated whether you are protected if you rescind a reaffirmation it is likely.

5. Reaffirm and Argue to the Judge to not approve the reaffirmation – Is this option ethical? If you do it right I think it is but you need to discuss this carefully with your attorney. If your attorney believes that the reaffirmation poses an undue hardship on you it has to go in front of the judge. Even if you want to reaffirm your attorney is duty bound to not sign off and tell the judge that he or she believes you cannot afford it if that is the case.
If the judge fails to approve it then you are probably protected and can just keep making the payments and ride thru!

6. “Ride Thru” or Keep and pay and not reaffirm – If the lender does not object this is the best option if you are not seriously upside down. You keep up the payments but cannot be sued if you default or the car is totalled. You can walk away from it at any time and all they can do is repossess it. Ford Credit and GMAC/Nuvell and some greedy credit unions will actually repossess your car if you try this. I argue that if the lender accepts payments after the bankruptcy filing they have waived the default caused by your bankruptcy. We will see if I have to ever litigate this issue.

Whichever option you chose you need to discuss this carefully with your attorney. There are a lot of considerations to take into account.

Additionally Zandi also said the overalll outlook for the econony is not good. My opinion is that Zandi is right. The press and the politicians have been trying to convince us that things are getting better while we all see that things are getting worse. Zandi is courageous to tell the truth that things are not getting better and that these so called mortgaqe modification programs are not accomplishing anything. It is time that Congress give bankruptcy judges the power to modify home mortgages of debtors’ primary residences.

As long as your donation is to a religious or charitable non-profit organization it is protected in several ways. In Chapter 7 it does not count against you on the means test, it will be deducted from your “disposable income” as long as you intend to continue the donations every month.

A Chapter 7 trustee also cannot void charitable gifts with the 15 percent limitation. In Chapter 13 you can continue to give up to 15 percent each year during the case and it cannot be held against you. It should be listed in your budget. In short continue exercising your faith and enjoy the pleasure of giving. It is better to give than to receive!