Sixth Circuit BAP Allows Debtor to Avoid Unperfected Mortgage on Manufactured Home – In re Barbee

Vincent Howard and our team of Riverside County foreclosure defense lawyers were interested to see another ruling allowing a bankruptcy debtor to successfully avoid a lien on a manufactured home. In In re Barbee, the Bankruptcy Appellate Panel for the Sixth U.S. Circuit Court of Appeals found that Gary D. Barbee of Kentucky may avoid a lien on his manufactured home because the lender, U.S. Bank, never perfected its lien on the home. Barbee mortgaged the land and all improvements, including a double-wide trailer built onto the land. When he later filed for bankruptcy, he argued that the bank never perfected its lien because it never acquired title to the manufactured home. The bankruptcy court agreed, and after review, the Sixth Circuit BAP allowed that ruling to stand.

Barbee and Rebecca Gaunce borrowed about $75,500 from Countrywide to buy the land in 1999, encumbering “all improvements and fixtures” on it. They never acquired title to the home, but the record shows it was gutted and rebuilt as a non-mobile home in 1997. In 2009, Barbee filed for Chapter 13 bankruptcy; Gaunce filed a separate case in which there was no controversy with the lender. Six months later, the bankruptcy court allowed Barbee to pursue an adversary complaint alleging that the bank’s interest is avoidable because it was not perfected by acquiring title. Both sides filed for summary judgment, with the bank arguing that Barbee lacked standing to bring the adversary proceeding in the first place because he also has no title and no interest in the home other than as an improvement or fixture on real estate. The bankruptcy court disagreed, ruling the lien avoidable because ownership was never noted on the title and the home had not been converted to real property.

In a ruling that relied heavily on the Sixth Circuit’s 2011 manufactured home case, Countrywide Home Loans v. Dickson, the Sixth Circuit BAP upheld the bankruptcy court. The BAP in Dickson ruled that the debtor did have standing to avoid a lien even though she was not the trustee, and while the Sixth Circuit itself never reached the issue, the BAP adhered to that precedent. The BAP also ruled that the home is a part of Barbee’s bankruptcy estate, because he has an equitable interest regardless of whether he has the title. However, under Kentucky law, a manufactured home is personal property, which means perfecting a lien requires noting it on the title or converting it n court. Bankruptcy law says a property interest must be created by state law or federal interest, the court said, rending the bank’s mortgage argument incorrect. Other bank arguments were waived because they were used for the first time on appeal. Thus, the BAP agreed that the lien is avoidable.

Our San Juan Capistrano foreclosure defense attorneys are pleased to see another opinion requiring lenders to answer for the consequences of their inaction when it comes to legal technicalities. Very often, borrowers are the ones who suffer when lenders aren’t prompt or make mistakes with paperwork, and it takes an experienced attorney like Vincent Howard to keep these mistakes from doing lasting harm. This case and Dickson rely to some extent on the fact that a manufactured home is treated as a different kind of property in Kentucky — more akin to a car than a home. It’s unclear whether this is true everywhere, but because Dickson reportedly created a split in the circuits, the issue is likely to be revisited. At Howard Law, P.C., our Oceanside foreclosure defense lawyers help clients find quirks like these that can help them fight a rushed or unfair foreclosure.

How the MF Global Bankruptcy Is Affecting Charities

Since MF Global filed for bankruptcy protection at the end of October, much of the media attention has been focused on the scandal of the $1.2 billion in investor money that the firm cannot account for. That money, which reportedly belongs to about 38,000 investors, may have been used for MF Global’s own (questionable) investments in European debt.

But now, as the end-of-year charity giving season is in its final throes, another kind of fallout from the MF Global bankruptcy is coming to light: its effect on charity donations. According to sources, the country’s eighth-largest bankruptcy is likely to affect charity giving in a number of ways:

• Individual donors who invested with MF Global and lost money (when the firm misplaced those funds) may be less likely to contribute to charities than they were in recent years. Because many smaller investors lost significant amounts of money (relative to their total net worth), tens of thousands of potential charity donations might have been wiped out by MF Global’s collapse.
• Corporate charity organized by the CME Group will likely not occur. In years past, sources note, the CME Group kept a trust (called the CME Trust) of $50 million to compensate investors who were unfortunately hooked into (and who lost money by) fraudulent investment schemes. In the past, most of that money got donated to charities at year’s end; this year, however, the entire trust went toward compensation of MF Global investors who lost money.
• Some charities invested money with MF Global. In addition to the individual clients who lost money, organizations (including nonprofits and charities) put their money with this firm, as it was meant to be a relatively safe investment option. Now the firm’s bankruptcy will translate to a direct loss of funds for charity investors.

It’s no secret that the wealthiest citizens of the U.S. are often the ones behind major charitable grants and donations. But few news sources have discussed the potential effect a major bankruptcy like MF Global’s, which includes debts of more than $39 billion, is likely to have on charitable organizations this year.

What is perhaps even more troubling is that this blow to charities comes during a time when individual donors have cut back on charitable contributions because of unemployment and reduced wages. Naturally, the persistently tough economy also means that more Americans than ever are in need of the support that charitable organizations traditionally offer.

In recent years, the CME Trust donated millions of dollars to Chicago-area educational institutions, including universities, charter schools, and organizations that fund education in the city. Without such donations, those and other groups could face significant financial difficulties in 2012.

Free Workshop for Dealing With Your Debts

Free Workshop at the San Francisco Law Library on February 6, 2012.

We will address various ways to deal with your debt including:

• Debt settlement
• Chapter 7 or Chapter 13
• Dealing with underwater homes
• Consequences of doing nothing

Monday, February 6, 2012 12:00 PM 1:00 PM

 
San Francisco Law Library
401 Van Ness Ave, Room 400
San Francisco, CA 94102

Quick Guide to Fees and Costs Associated With Filing Bankruptcy

Chapter 7 Fees

Chapter 7s typically take about three months from start to finish. Your lawyer would normally charge from $800.00 to $2000.00, depending on several factors such as how many people are filing, how much debt you have and what types of debt you have.

Chapter 13 Fees

Chapter 13s typically run from three to five YEARS, so the fee is higher. Each jurisdiction has certain guidelines for fees, for example, in Chicago, the fee is allowed to be $3500.00. In Ohio, the fee can be $3000.00. These fees are for the entire life of the Plan, and typically are paid in a portion up front and the rest in the Chapter 13 re-paymant Plan.

Court fees

The Clerk of Courts charges fees for processing your case, called filing Fees. For Chapter 7, the filing fee is $306.00. For Chapter 13, the filing fee is $281.00. Keep in mind, the CLERK charges over $300.00 for processing the paperwork your lawyer drafted. Now, if the CLERK charges this much just to PROCESS your paperwork, how in the World could a GOOD attorney charge you only $450.00 $600.00?? Dont go with a cut-rate bankruptcy lawyer, unless you want a cut-rate bankruptcy. The bankruptcy affects all future credit youll ever get, so make sure to hire a lawyer that knows bankruptcy law!

Dean D. Paolucci, Attorney at Law Paolucci Law 800.825.7010 Servicing Northern Ohio and Northern Illinois

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is a “reorganization” bankruptcy rather than a complete liquidation of debt as in a Chapter 7. A Chapter 13 is, basically, a payment plan enforced by the Federal Bankruptcy Court upon all of your creditors, whether the debt is a “dischargeable” debt like a credit card or “non-dischargeable” debt like a child support arrearage or recent income taxes owed. Contrary to popular belief, you are not required to pay back 100% of what you owe to your creditors in a Chapter 13. 

The Chapter 13 Plan may be 36-60 months long. Although there is no income-based eligibility standard in a Chapter 13, the same income-based “means test” that determines Chapter 7 bankruptcy eligibility also determines whether you may have a 36-month Plan. The Chapter 13 Plan is devised by you and your attorneys and proposed to the court for its and for creditors’ approval. What you pay in a Chapter 13 Plan is whatever net income you have in your household each month, after basic household expenses, such as food and gas and utilities are taken into account. For instance, if you have $1500 in net household income each month and $1200 in household expenses, your Plan payment would be $300 every month. 

The approval process for the Chapter 13 Plan is roughly 5-6 months long and will require you to attend, typically, at least two hearings at the Bankruptcy Court. Once the Plan is approved by the Trustee who is assigned to your case by the Court when it is filed, you are off and running, your only obligations being a timely monthly payment and good communication with your attorney, should your income decrease or expenses increase at any time. 

Chapter 13 is the form of bankruptcy available to you if you are not qualified to file a Chapter 7 bankruptcy.  However, there are many good reasons to file a Chapter 13 even if you are qualified for Chapter 7. 

First, there is no liquidation of your personal assets in a Chapter 13. If you have property that would be seized and sold off in a Chapter 7, a Chapter 13 may be your best option if that property is important to you. 

For this same reason, if you are running a small business, a Chapter 13 may be a wiser option so that you do not risk losing your business in a Chapter 7, where the Trustee has the right, under certain circumstances, to seize and wind down your business. 

Second, in a Chapter 7 bankruptcy, you either keep or surrender your real estate as-is, with all mortgages intact. In a Chapter 13, we can pursue a mechanism called a “lien-strip,” which will remove and discharge your liability to make payments on a second mortgage, if your house is worth less in fair market value than you owe on a first mortgage. 

We can also, under certain circumstances, cram down the payment you make for other secured debts, such as a car payment, so that you pay in full in the Chapter 13 plan only what the property security it as actually worth. If your car, for example, was purchased more than 3 years ago and has more than 75,000 miles on it, you will pay off your loan in a Chapter 13 only to the extent of the car’s real value.

Tax debts and other non-dischargeable debts, with the exception of student loans, can also be paid off through a Chapter 13 Plan at 0% interest—a few percent better than the IRS will give you in most of its repayment plans. 

A Chapter 13 can also be dismissed at any time if it is no longer working for you, or it can be converted to a Chapter 7 later on, if your economic circumstances decline. It is a highly flexible process. 

Chapter 13 Bankruptcy, best of all, requires virtually no negotiation with your creditors for it work. It is one of the most effective and most efficient processes for dealing with personal debt left in the American legal system. Debts discharged through bankruptcy carry no taxable penalty. 

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House price forecasts are a mug’s game – so here’s mine for 2012

House price forecasts are a mugs game, thats something Ive learnt over many years of being cajoled into making them.

Nothing highlights that more that how the property market defied gravity in 2011, with a catalogue of bad news failing to drag prices down substantially. In fact, Nationwide said prices rose by 1 per cent last year. [see the chart above]

However, the headline figures do not tell the full story, as they only measure properties that sell, or mortgages that are approved for buyers on them – they cannot measure what it would take in terms of price falls for all the properties sat on estate agents shelves to be shifted.

Bad Credit Debit Card Payday Loans

Is your bad credit score the main obstacle stopping you from getting a loan to eliminate your financial woes? Now there is no need to panic as payday loans are there to rescue you from your monetary hurdles by allowing you to have access to quick bucks without any credit check.

That is a ray of light for those of who have a weak credit record as such clients are usually turned down by typical loan lenders. Banks avoid taking risks by giving loans to individuals with negatively spotted score while payday online loaners agree to take this risk by compensating it with a loaning fee. This fee or interest charge is higher than the traditional forms of bank loans but this is because of the short term nature of payday cash and instant access to modest sum of money without any hassle of time consuming paperwork.

For qualifying to avail the merits of faxless online loans, you need to be at least 18 years of age, have a checking account and a stable source of income or employment. If you meet this criterion, you are eligible to apply for a bad credit loan. The lenders only give a short application form to fill with relevant details and after a quick review, they credit your account with the desired money.

The repayment process is extremely simple. You can just show your debit card to your lender and he will electronically transfer money into your checking account. Some loan lenders however, ask for a postdated check before sanctioning loan.

Fresh Start on a New Year

The first few months of the year are a busy time for bankruptcy attorneys. There are two reasons for this: first. First, it is the start of a new year and a good time for a change. The holiday season has passed and families begin making plans for the future. When you take a look at your finances and an ugly pile of unpaid bills is looking back at you, it is probably time to consult with an experienced bankruptcy attorney.

The second reason is tax season. While filing for bankruptcy is cheap compared to many other legal services, finding extra cash to pay court fees, the credit counseling class, and your attorney’s fees can be challenging. Many debtors use income tax refunds to pay bankruptcy fees.

The safest advice for a debtor expecting a tax refund is to postpone filing bankruptcy until after you have received and spent your income tax refund.  Any expected refund that has not been received is property of the bankruptcy estate. The debtor must account for the expected refund and then apply a legal exemption to protect it. If you underestimate your refund, and do not have enough legal exemptions to protect it, you may lose a portion of your tax refund.

Taxes that have been received and spent before filing bankruptcy are not property of the bankruptcy estate. However, it is important to spend your income tax refund wisely. Any payment of over $600 to one creditor just prior to filing must be reported, and the bankruptcy trustee may ask the creditor to return the money. Gifts or loan payments to friends or family members can also be “avoided” by the trustee. Consult with your attorney before spending your income tax refund.

Tax season is a good time to file bankruptcy. Your income taxes have been recently prepared, and this information is needed for your bankruptcy case. Your attorney can advise you concerning the best time to file bankruptcy. Make your new year a fresh start on a better financial future.