April 2011 Archives

April 26, 2011

How and When to Reopen a Bankruptcy Case

Sometimes people want to reopen a closed bankruptcy case because they failed to invoke important procedures while their bankruptcy case was open.

BankruptcyPetitioniStockPhoto.jpgFortunately it's usually possible to reopen the bankruptcy and play catch-up. Common reasons for wanting to reopen a bankruptcy case include:

  • failing to timely file an Official Form 23 (pre-discharge counseling certification)
  • failing to name an important creditor or list valuable property, or
  • failing to take necessary steps to remove a judgment lien from real estate.

The process for reopening a bankruptcy case involves two steps.

Step One: Ex Parte Motion to Reopen. The first step is what's known as an ex-parte motion to reopen the case. This is a request to the judge that the case be reopened without giving advance notice to the creditors or scheduling a hearing. The paperwork, which consists of the motion or request, and an order granting the request, is pretty simple and widely available, both in Nolo's How to File for Chapter 7 Bankruptcy, by Albin Renauer, Steve Elias, and Robin Leonard, and various bankruptcy lawyer websites.

Step Two: Request for the Desired Action. The second step is to request (by motion and order) that the judge allow the desired action, for instance the removal of a judicial lien on real estate, or the entry of an order of discharge.

The fee for reopening a bankruptcy case is $274, so it's obviously less expensive to get everything done while you case is open. However, if you are trying to remove a lien worth many thousands of dollars, or asking for a discharge an expensive student loan, the fee to reopen the case is relatively unimportant.

April 18, 2011

New Mexico Debt Collection Rule Is a Victory for Debtors

FinalNoticeIStock.jpgNew Mexico's Attorney General will begin enforcing a new Rule which requires debt collectors doing business in New Mexico to (1) make a good faith effort to determine if collection of a debt is time-barred (meaning it is too late to sue for recovery of the debt in court) and (2) if it is time-barred, to so inform the debtor. The collector must also tell the debtor that signing a new agreement to pay the debt, or making a partial payment might "revive" the debt, resetting the time period that the collector has to sue on the debt. (To learn more about time-barred debts, and what that means for collection of the debt, read Nolo's article Time-Barred Debts: When Collectors Cannot Sue You for Unpaid Debts.)

The Attorney General implemented the rule in order to end "an industry-wide [debt collection] practice that tends to or does mislead or deceive" consumers by failing to provide important information to consumers - that is, that a debt is so old that it is legally unenforceable in court. The new Rule is a victory for consumers. As New Mexico Attorney General King said: "This Rule is intended to ensure that debt collectors provide important information to consumers so that they can make informed decisions when they are confronted with a demand to pay an old unenforceable debt."

The law went into effect on December 15, 2010, but the Attorney General delayed enforcement until March 15, 2011 in order to give debt collectors time to revamp their practices. You can read the Attorney General's announcement here. The announcement contains a link to the text of the new rule.

By: Guest Blogger Kathleen Michon 

April 14, 2011

Foreclosures Down, But Not for the Right Reasons

ForeclosureIStock.jpgAccording to RealtyTrac, foreclosures in the first three months of 2011 are trending down as compared to 2010. Foreclosures in January, Februrary, and March of 2011 are down by 27% as compared to foreclosures in the same months of 2010.

Unfortunately, most experts agree that this trend is not due to a healthier economy and housing market, but instead to bank backlogs in the foreclosure process. In 2010/2011 the media called attention to banks' shoddy foreclosure practices (for more on this see Nolo's article False Affidavits in Foreclosures: What the Robo-Signing Mess Means for Homeowners). Courts slapped banks for taking shortcuts on foreclosure paperwork and bypassing procedures meant to protect mortgage holders. Because some banks can no longer ram through foreclosures, a backlog has built, slowing the foreclosure rate.

By: Guest Blogger Kathleen Michon

April 12, 2011

Watch Out For the Newest Foreclosure Scam in California

Scams involving purported mortgage modifications and foreclosure assistance have abounded since the California foreclosure crisis in 2009. The California Department of Real Estate recently warned consumers about the newest version of these scams. (To learn more about foreclosure, check out Nolo's Real Estate & Rental Property area.)

In this scam, a "lawyer" invites homeowners to join a mass joinder or class action against a bank or mortgage company. The "lawyer" promises results such as stopping foreclosures, lowering mortgage payments, lowering principal balances, or eliminating mortgages altogether. "Clients" must pay a nonrefundable fee, often between $3,000 and $9,000 to join the litigation. The litigation is a sham, and the clients receive nothing.

Scammers often solicit victims by mass mail or advertise the "litigation" on the Internet. The solicitations often sound legitimate, and require clients to sign lengthy retainer agreements.

To learn more about this scam, and how to protect yourself, check out the California Department of Real Estate's consumer alert.

by Guest Blogger Kathleen Michon