Bankr. W.D.N.C.: In rea Peach- Sanctions for Dual Tracked Mortgage Fees Ed Boltz Thu, 04/10/2025 - 17:38 Summary: After Shellpoint began servicing the debtor's mortgage (paid through a conduit plan) in 2024 , it issued monthly mortgage statements listing unexplained fees (totaling $890) as “paid,” though no payments for those specific charges had been authorized or made by the debtor.   The debtor eventually brought a motion for sanctions against Shellpoint.  Shellpoint argued that even if prohibited from collecting the fees during or after a successfully completed Chapter 13 plan, that it could, nonetheless, collect those fees if the court dismissed the case. In granting the debtor's motion for sanctions and attorney’s fees against Shellpoint Mortgage Servicing,  the bankruptcy  court found that Shellpoint violated both Bankruptcy Rule 3002.1  and N.C.G.S.   § 45-91 by improperly assessing and attempting to collect unauthorized post-petition fees—including legal and property inspection fees—without notice, court approval, or compliance with required procedures, as the statements used misleading language such as "waiver" while simultaneously listing the charges as paid. Shellpoint failed to file the required notice of these post-petition fees under Federal Rule of Bankruptcy Procedure (FRBP) 3002.1 or seek court approval under Local Rules and  also failed to comply with North Carolina General Statute § 45-91, which requires clear disclosure and timely assessment of mortgage-related fees. The court found that  Shellpoint violated FRBP 3002.1, N.C.G.S. § 45-91, and the confirmed Chapter 13 plan by assessing fees without required notice or approval and  created confusion for the debtor,  undermining  the integrity of the bankruptcy process.  Accordingly,  pursuant to 11 U.S.C. § 105 and FRBP 3002.1(i), the court imposed sanctions and awarded attorney’s fees.  It further ordered that all post-petition fees assessed by Shellpoint (legal, inspection, and other charges) are disallowed and must be removed from the debtor’s mortgage account, enjoining it from assessing any future post-petition mortgage fees without compliance with applicable law and rules.  Lastly, the court  admonished Shellpoint that further non-compliance in future cases may result in significantly harsher sanctions. Commentary: Very nice job by Geoffrey Planer.  This case is a welcome extension of the case law supporting both FRBP 3002.1 and N.C.G.S. § 45-91  (remaining to be asserted is that  12 U.S.C. § 2605(k)(E)  and  12 C.F.R. § 1024.35(b)(5) also prohibit the "[i]Imposition of a fee or charge that the servicer lacks a reasonable basis to impose upon the borrower")   in requiring mortgage servicers to notify homeowners in Chapter 13 of any and all fees and charges that it asserts are due,  by preventing mortgage servicers from in essence keeping  two sets of books,  namely one if the debtor successfully complete Chapter 13 and another,  with enhanced and often secret fees,  that it will spring on the debtor in the event the case is dismissed.  (It is not necessarily unfair to suspect that mortgage servicers try to assert these higher fees against homeowners with successful plans,  just waiting a few months or until there is a transfer of servicing,  so that judicial and attorney attention has faded.) The admonition to Shellpoint is also helpful as it severely erodes any fairground of doubt that it might later assert that its errors,  failures and misdeeds are innocent or a result of confusing or conflicting laws.  Whether Shellpoint (and other mortgage servicers)  will find it necessary to proactively clean their accounts  of similarly confusing and erroneous mortgage statements  likely depends on how  broadly and systematically debtors attorneys and Chapter 13 Trustees  seek information regarding compliance.  Perhaps using the attached sample RFI... With proper attribution,  please share this post.  To read a copy of the transcript, please see: To read a copy of the transcript, please see: Blog comments Attachment Document in_re_peach_1.pdf (494.7 KB) Document peach_rfi_1.docx (16.94 KB) Category Western District

Bankr. E.D.N.C.: In re Hutsell- Life Insurance Proceeds not Exempt Ed Boltz Wed, 04/09/2025 - 15:35 Summary: The debtor, who tragically lost her husband just days after filing her Chapter 13 petition, sought to exempt life insurance proceeds payable to her as beneficiary under a personal policy. Her argument relied on § 1C-1601(a)(8), which protects "compensation for the death of a person upon whom the debtor was dependent for support." But the bankruptcy court, following In re Ragan, 64 B.R. 384 (Bankr. E.D.N.C. 1986), ruled that this “compensation” means wrongful death recoveries, not contractual insurance payouts, reasoning that: The term “compensation” in (a)(8) has historically been interpreted narrowly, aimed at tort recoveries rather than contractual entitlements. If the North Carolina legislature had intended to include life insurance proceeds under (a)(8), it would have said so — especially given its post-Ragan amendment of that very statute in 2005, which left the relevant language untouched.  Meanwhile, life insurance is already separately addressed in § 1C-1601(a)(6) (which mirrors the NC Constitution) and § 58-58-165 (for group policies).  In short: while North Carolina exemptions protect both Tort-based wrongful death proceeds from a personal injury lawsuit and  Group life insurance proceeds under § 58-58-165,   a debtor cannot  claim an exemption for life insurance proceeds from the death of a spouse — even if the debtor was financially dependent on that spouse.  Commentary: Judge McAfee acknowledged the emotional and financial hardship this outcome imposes and that it  exposes a glaring gap in North Carolina’s exemption framework. The state permits creditors of the beneficiary — in this case, a grieving widow — to reach life insurance proceeds that are otherwise protected from the insured’s creditors. As Judge McAfee noted, “it is difficult to articulate a rationale” for allowing tort proceeds but not insurance proceeds to be exempted in these tragic circumstances. It is time for the North Carolina General Assembly to revisit § 1C-1601(a)(8) and clarify or expand the scope of "compensation for death" to include life insurance proceeds when the debtor was financially dependent on the decedent.  The best action that members of the North Carolina Bar Association can take is to complete its survey regarding exemption updates.  There have already been comments regarding the need for the statute to be amended in response to Hutsell.  That survey can be completed at this link: Complete the survey via this link. Practice Tips & Takeaways Post-petition windfalls within 180 days — including life insurance — are property of the estate under § 541(a)(5). Absent a clear exemption, these funds can require 100% plans or force debtors into conversion or dismissal. Group policy proceeds are exempt under N.C.G.S. § 58-58-165 — don’t forget to distinguish personal from group coverage. Prepetition planning is key:  If life insurance is a likely asset, Chapter 7 may be a more protective structure (particularly if the policy is owned by the deceased, not the debtor). Additionally,  family members can remove the debtor as a beneficiary (naming the beneficiaries children or even a spendthrift trust) at any time before death,  protecting those proceeds from creditors. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document in_re_hutsell.pdf (404.76 KB) Category Eastern District

Economics Review: Mangrum, Daniel and Wang, Crystal, Credit Score Impacts from Past Due Student Loan Payments & Student Loan Balance and Repayment Trends Since the Pandemic Disruption Ed Boltz Tue, 04/08/2025 - 19:53 Available at:  Credit Score Impacts from Past Due Student Loan Payments Student Loan Balance and Repayment Trends Since the Pandemic Disruption Summary: In these  companion posts from the New York Federal Reserve, the authors  highlighted how the pandemic and subsequent policy actions disrupted trends in the growth of student loan balances, the pace of repayment, and the classification of delinquent loans and  also how these changes affected the credit scores of student loan borrowers and how the return of negative reporting of past due balances will impact the credit standing of student loan borrowers. The authors estimate that more than nine million student loan borrowers will face significant drops in credit score once delinquencies appear on credit reports in the first half of 2025.  Commentary: As a  disproportionate number of student loan borrowers had prior delinquencies — indicating a high risk of re-default now that protections have lapsed —  from a bankruptcy perspective, this is the canary in the credit coal mine. These borrowers are not just behind on student loans; they are likely carrying correlated financial stress: credit cards, car loans, and medical debt. Filing a bankruptcy may make payment of those student loans affordable by eliminating other debt and may, depending on the continuation of the Department of Justice Student Loan guidance regarding stipulations of dischargeability, offer permanent relief. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document lse_2025_credit-score-impacts-mangrum-data.xlsx (60.3 KB) Document lse_2025_student-loan-balance-repay-mangrum-data.xlsx (65.34 KB) Document student_loan_balance_and_repayment_trends_since_the_pandemic_disruption_-_liberty_street_economics_compressed.pdf (287.24 KB) Document credit_score_impacts_from_past_due_student_loan_payments_-_liberty_street_economics_compressed.pdf (249.05 KB) Category Book Reviews

Arizona’s Bankruptcy Exemption Waiting Periods Sometimes, potential clients come to us reluctant about filing for bankruptcy because they believe they will be forced to give up all of their possessions. It is a legitimate concern, because the trustee can seize debtors’ assets and sell them at bankruptcy auction. But this is only true if the assets can’t be protected by bankruptcy exemptions. A debtor can use exemptions to protect their house, car, clothing, and other possessions in bankruptcy. These are the types of items that are necessary to maintain a reasonable lifestyle both during and after bankruptcy. It is crucial to protect them if you clear your debts, or you could end up in a negative financial situation all over again. Read on to learn more about Arizona’s residency requirement for bankruptcy exemptions. If you’d like more information about filing for bankruptcy in Arizona, contact our Arizona law firm for your free consultation at 480-470-1504.  Exemption Waiting Periods A bankruptcy debtor can’t file their petition wherever they see fit, and generally must meet residency requirements before they can benefit from a jurisdiction’s legal system. Residency requirements are how much time a person must spend in an area before filing a certain type of case. To be eligible to file for bankruptcy in Arizona, a debtor must have lived in the state for the greater part of 180 days, or 6 months. This phrasing allows for snowbirds and other part-time residents to still declare bankruptcy in Arizona. But meeting Arizona’s residency requirement to file doesn’t necessarily mean the debtor meets Arizona’s residency requirement to use bankruptcy exemptions.  While a debtor only needs to reside in Arizona 180 days to meet the filing residency requirement, the residency requirement to use Arizona’s bankruptcy exemptions is 730 days, or 2 years. Filing for bankruptcy can be quite detrimental if it will result in the debtor losing all of their assets. For someone who is relatively new to Arizona, it might not be worth it to file for bankruptcy without exemptions unless they have very few assets they are concerned about losing. Otherwise, it may be better to file for bankruptcy before moving to Arizona and getting a fresh start in more ways than one. You can consult with bankruptcy firms from both states if you are unsure about the best strategy to implement in your situation. For your free phone consultation with Arizona’s top choice for high-quality bankruptcy representation with flexible payment plans starting at Zero Dollars Down, call 480-470-1504.  Do I Need To Use Bankruptcy Exemptions? Whether or not you meet the residency requirement, it may not be entirely necessary to apply exemptions in your case. As previously mentioned, a bankruptcy debtor might not have assets in need of protection. If a debtor is ineligible to use bankruptcy exemptions, they may want to consider filing chapter 13 bankruptcy rather than chapter 7 bankruptcy. Any assets that aren’t covered by exemptions can be sold to pay debts in chapter 7 bankruptcy. But in chapter 13 bankruptcy, debts are reorganized into a payment plan that lasts 3 or 5 years. Because debts are repaid, there isn’t the same concern with seizing assets to sell at auction. So if you don’t yet qualify for Arizona’s bankruptcy exemptions, you may want to consider filing for chapter 13 bankruptcy. Your income will need to be high enough to pay off bankruptcy debts, secured debts, and priority debts during the prescribed time frame.  The Most Frequently Used Exemptions In Arizona Before you make major bankruptcy decisions based on your eligibility to use Arizona’s bankruptcy exemptions, it’s important to understand what they are. Some exemptions can be used on a singular asset, which may sometimes double for a married couple, or on any number of items up to a certain market value. You should look at your equity in an asset rather than its purchasing price when determining if it will be protected by an exemption. So if your house is worth $50,000 more than Arizona’s homestead exemption but you have $100,000 left on the loan, this would bring your equity back in the range of being protected by the exemption. Some of the Arizona bankruptcy exemptions that may be relevant in your case include: Homestead exemption: This exemption can be used on a house or condo. It can be used on a mobile home and the land on which it is situated, but can’t be used on a motor home/RV. A bankruptcy debtor can also protect the proceeds from a home sale within the past 18 months with this exemption if it isn’t being applied to a new home. This exemption remains the same whether it is used by a single individual or a married couple.  Motor vehicle exemption: This exemption can be used on any motor vehicle of the debtor’s choosing, whether it’s a car, truck, motorcycle, etc. It can be doubled for a married couple, either by applying it to two separate vehicles or to just one vehicle with up to twice the value. This exemption increases if the debtor has specialized equipment in their vehicle due to a disability.  Retirement savings: Most debtors can protect all of their 401(k), IRA, and other retirement savings accounts in bankruptcy.  Household goods and furnishings: This exemption protects an aggregate value of household items rather than a specific list of items. It can be used to protect furniture, electronics, appliances, and other items around your house that can be easy to forget to think of as assets. There is a separate exemption for smaller items, like cleaning supplies, and groceries.  Wearing apparel: Bankruptcy law is written with the understanding that debtors need to purchase at least some new clothing from time to time. You can use the wearing apparel exemption to protect your clothes, shoes, and fashion accessories.  What’s missing? Some states offer a wildcard exemption, or the option to use federal bankruptcy exemptions, which also offer a wildcard exemption. This type of exemption can be used on any asset the debtor selects. Arizona does not have a wildcard exemption, nor does it allow debtors to use the federal exemptions. It should also be noted that the exemption to protect cash on hand and bank accounts in Arizona is low- it probably looks similar to your grocery bill.  Want To Confirm You Are Eligible To Use Arizona’s Bankruptcy Exemptions? Start With Your Free Consultation.  Bankruptcy debtors have the choice to represent themselves, but that isn’t usually a wise one. There are multiple residency requirements you must meet to successfully discharge debts and protect your assets if you wish to declare bankruptcy in Arizona. And this is just one facet of the bankruptcy process. If you want your case completed correctly, you should retain an experienced legal professional as bankruptcy counsel. Don’t let upfront bankruptcy costs keep you from learning more about your debt relief options. Our Arizona law office offers free consultations by phone, and eligible clients can file their case with our firm for Zero Dollars Down. Don’t let your debt issues continue to burden and constrain you any longer. Learn more about the process of filing for bankruptcy in Arizona by calling 480-470-1504 or contact us!   MY AZ LAWYERS Email: info@myazlawyers.com Website: www.myazlawyers.com Mesa Location 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: 480-448-9800 Phoenix Location 343 West Roosevelt, Suite #100 Phoenix, AZ 85003 Office: 602-609-7000 Glendale Location 20325 N 51st Avenue Suite #134, Building 5 Glendale, AZ 85308 Office: 602-509-0955 Tucson Location 2 East Congress St., Suite #900-6A Tucson, AZ 85701 Office: 520-441-1450 Avondale Location 12725 W. Indian School Rd., Ste E, #101 Avondale, AZ 85392 Office: 623-469-6603 The post Arizona’s Bankruptcy Exemption Waiting Periods appeared first on My AZ Lawyers.

Arizona’s Bankruptcy Exemption Waiting Periods Sometimes, potential clients come to us reluctant about filing for bankruptcy because they believe they will be forced to give up all of their possessions. It is a legitimate concern, because the trustee can seize debtors’ assets and sell them at bankruptcy auction. But this is only true if the assets can’t be protected by bankruptcy exemptions. A debtor can use exemptions to protect their house, car, clothing, and other possessions in bankruptcy. These are the types of items that are necessary to maintain a reasonable lifestyle both during and after bankruptcy. It is crucial to protect them if you clear your debts, or you could end up in a negative financial situation all over again. Read on to learn more about Arizona’s residency requirement for bankruptcy exemptions. If you’d like more information about filing for bankruptcy in Arizona, contact our Arizona law firm for your free consultation at 480-470-1504.  Exemption Waiting Periods A bankruptcy debtor can’t file their petition wherever they see fit, and generally must meet residency requirements before they can benefit from a jurisdiction’s legal system. Residency requirements are how much time a person must spend in an area before filing a certain type of case. To be eligible to file for bankruptcy in Arizona, a debtor must have lived in the state for the greater part of 180 days, or 6 months. This phrasing allows for snowbirds and other part-time residents to still declare bankruptcy in Arizona. But meeting Arizona’s residency requirement to file doesn’t necessarily mean the debtor meets Arizona’s residency requirement to use bankruptcy exemptions.  While a debtor only needs to reside in Arizona 180 days to meet the filing residency requirement, the residency requirement to use Arizona’s bankruptcy exemptions is 730 days, or 2 years. Filing for bankruptcy can be quite detrimental if it will result in the debtor losing all of their assets. For someone who is relatively new to Arizona, it might not be worth it to file for bankruptcy without exemptions unless they have very few assets they are concerned about losing. Otherwise, it may be better to file for bankruptcy before moving to Arizona and getting a fresh start in more ways than one. You can consult with bankruptcy firms from both states if you are unsure about the best strategy to implement in your situation. For your free phone consultation with Arizona’s top choice for high-quality bankruptcy representation with flexible payment plans starting at Zero Dollars Down, call 480-470-1504.  Do I Need To Use Bankruptcy Exemptions? Whether or not you meet the residency requirement, it may not be entirely necessary to apply exemptions in your case. As previously mentioned, a bankruptcy debtor might not have assets in need of protection. If a debtor is ineligible to use bankruptcy exemptions, they may want to consider filing chapter 13 bankruptcy rather than chapter 7 bankruptcy. Any assets that aren’t covered by exemptions can be sold to pay debts in chapter 7 bankruptcy. But in chapter 13 bankruptcy, debts are reorganized into a payment plan that lasts 3 or 5 years. Because debts are repaid, there isn’t the same concern with seizing assets to sell at auction. So if you don’t yet qualify for Arizona’s bankruptcy exemptions, you may want to consider filing for chapter 13 bankruptcy. Your income will need to be high enough to pay off bankruptcy debts, secured debts, and priority debts during the prescribed time frame.  The Most Frequently Used Exemptions In Arizona Before you make major bankruptcy decisions based on your eligibility to use Arizona’s bankruptcy exemptions, it’s important to understand what they are. Some exemptions can be used on a singular asset, which may sometimes double for a married couple, or on any number of items up to a certain market value. You should look at your equity in an asset rather than its purchasing price when determining if it will be protected by an exemption. So if your house is worth $50,000 more than Arizona’s homestead exemption but you have $100,000 left on the loan, this would bring your equity back in the range of being protected by the exemption. Some of the Arizona bankruptcy exemptions that may be relevant in your case include: Homestead exemption: This exemption can be used on a house or condo. It can be used on a mobile home and the land on which it is situated, but can’t be used on a motor home/RV. A bankruptcy debtor can also protect the proceeds from a home sale within the past 18 months with this exemption if it isn’t being applied to a new home. This exemption remains the same whether it is used by a single individual or a married couple.  Motor vehicle exemption: This exemption can be used on any motor vehicle of the debtor’s choosing, whether it’s a car, truck, motorcycle, etc. It can be doubled for a married couple, either by applying it to two separate vehicles or to just one vehicle with up to twice the value. This exemption increases if the debtor has specialized equipment in their vehicle due to a disability.  Retirement savings: Most debtors can protect all of their 401(k), IRA, and other retirement savings accounts in bankruptcy.  Household goods and furnishings: This exemption protects an aggregate value of household items rather than a specific list of items. It can be used to protect furniture, electronics, appliances, and other items around your house that can be easy to forget to think of as assets. There is a separate exemption for smaller items, like cleaning supplies, and groceries.  Wearing apparel: Bankruptcy law is written with the understanding that debtors need to purchase at least some new clothing from time to time. You can use the wearing apparel exemption to protect your clothes, shoes, and fashion accessories.  What’s missing? Some states offer a wildcard exemption, or the option to use federal bankruptcy exemptions, which also offer a wildcard exemption. This type of exemption can be used on any asset the debtor selects. Arizona does not have a wildcard exemption, nor does it allow debtors to use the federal exemptions. It should also be noted that the exemption to protect cash on hand and bank accounts in Arizona is low- it probably looks similar to your grocery bill.  Want To Confirm You Are Eligible To Use Arizona’s Bankruptcy Exemptions? Start With Your Free Consultation.  Bankruptcy debtors have the choice to represent themselves, but that isn’t usually a wise one. There are multiple residency requirements you must meet to successfully discharge debts and protect your assets if you wish to declare bankruptcy in Arizona. And this is just one facet of the bankruptcy process. If you want your case completed correctly, you should retain an experienced legal professional as bankruptcy counsel. Don’t let upfront bankruptcy costs keep you from learning more about your debt relief options. Our Arizona law office offers free consultations by phone, and eligible clients can file their case with our firm for Zero Dollars Down. Don’t let your debt issues continue to burden and constrain you any longer. Learn more about the process of filing for bankruptcy in Arizona by calling 480-470-1504 or contact us!   MY AZ LAWYERS Email: info@myazlawyers.com Website: www.myazlawyers.com Mesa Location 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: 480-448-9800 Phoenix Location 343 West Roosevelt, Suite #100 Phoenix, AZ 85003 Office: 602-609-7000 Glendale Location 20325 N 51st Avenue Suite #134, Building 5 Glendale, AZ 85308 Office: 602-509-0955 Tucson Location 2 East Congress St., Suite #900-6A Tucson, AZ 85701 Office: 520-441-1450 Avondale Location 12725 W. Indian School Rd., Ste E, #101 Avondale, AZ 85392 Office: 623-469-6603 The post Arizona’s Bankruptcy Exemption Waiting Periods appeared first on My AZ Lawyers.

SBA ENDS THE HARDSHIP ACCOMMODATION PLAN FOR SBA EIDL LOANS Effective March 19, 2025 the SBA has ended the Hardship Accommodation Plan (“Hardship Plan”) for SBA EIDL Loans.The Hardship Plan allowed SBA EIDL loan borrowers to repay the SBA 10% of the loan payment due for a period of 6 months (with no default) to give the borrower breathing room to restructure or reorganize. Under the Hardship Plan, if a borrower's monthly payment was $2,000, they could pay the SBA $200 for a 6-month period. After 6 months, the payments increased to 20%, then 50%, then 70%, and finally 90% for 6-month intervals until the loan was repaid.Under the Hardship Plan, interest continued to accrue under the original loan payment terms, causing the balance due to pay off the loan to increase during the Hardship Plan.As we noted in a prior post, the SBA also eliminated the Offer in Compromise plan  (https://shenwick.blogspot.com/2025/03/sba-does-not-allow-eidl-loans-to-be.html) Fewer options now exist for the struggling SBA EIDL loan borrower.Those options appear to be:1 Loan modification: Borrowers can request modified payment terms or extended repayment periods or negotiated repayment plans with the SBA.2. Hardship deferment: Borrowers experiencing economic challenges may be eligible for temporary payment deferrals.3 Full Loan Repayment from business or personal assets, if possible.4 Liquidation of Business Assets: Close the business or sell business assets and pay off or pay down the SBA EIDL loan with the sales proceeds. The SBA loan documents require that any business assets sold and subject to an SBA loan must be paid to the SBA at the time of sale. However, the borrower will remain liable for any deficiency owing after the paydown.5 Refinancing your existing SBA loan with a private lender and use the loan proceeds to pay down or payoff the SBA.6 File for bankruptcy. If the SBA EIDL loan exceeded $200,000 and an individual or entity guaranteed the loan, both the SBA borrower and guarantor may need to file for bankruptcy to discharge the SBA loan7 Default on the SBA loan and engage in Asset Protection Planning in case of legal action by the SBA or the Treasury Offset Program. At Shenwick & Associates, we can be retained to review the SBA Borrower & Guarantor financial information to determine the best course of action. Clients or their advisers with outstanding SBA EIDL loans who have questions about what they should do can contact Jim Shenwick, Esq to discuss their situation.Jim Shenwick, Esq  917 363 3391  jshenwick@gmail.com Please click the link to schedule a telephone call with me.https://calendly.com/james-shenwick/15minWe help individuals & businesses with too much debt!

Chapter 7 income eligibility got slightly easier April 1, 2025 If you are making less than the median income, you have income eligibility to file Chapter 7 bankruptcy. Those eligibility numbers adjusted up, April 1, 2025.  For Virginia, eligibility is automatic for singles under $77,420, family of 4 under $145,585. What if I’m over the median income? You can still pass the “means test.” You can still be eligible for Chapter 7 if you are over that median income cutoff.  But you have to pass means test.  The means test is a way of looking at your budget to see if you are legitimately broke. For the means test, you need to budget carefully. Here are some of the main budget items that can help you if you are over the median. Child care Help for elderly family members Medical expenses, co-pays, prescriptions, dental work, etc. Big car payment Big mortgage payment Living in a high rent county If you are over the median income, really, really careful budgeting is required to show Chapter 7 income eligibility on the means test.   Northern Virginia bankruptcy lawyer Robert Weed. Knowledgeable and kind; friendly service with a smile.   The post Chapter 7 income eligibility gets slightly easier appeared first on Robert Weed Bankruptcy Attorney.

Chapter 7 income eligibility got slightly easier April 1, 2025 If you are making less than the median income, you have income eligibility to file Chapter 7 bankruptcy. Those eligibility numbers adjusted up, April 1, 2025.  For Virginia, eligibility is automatic for singles under $77,420, family of 4 under $145,585. What if I’m over the median income? You can still pass the “means test.” You can still be eligible for Chapter 7 if you are over that median income cutoff.  But you have to pass means test.  The means test is a way of looking at your budget to see if you are legitimately broke. For the means test, you need to budget carefully. Here are some of the main budget items that can help you if you are over the median. Child care Help for elderly family members Medical expenses, co-pays, prescriptions, dental work, etc. Big car payment Big mortgage payment Living in a high rent county If you are over the median income, really, really careful budgeting is required to show Chapter 7 income eligibility on the means test.   Northern Virginia bankruptcy lawyer Robert Weed. Knowledgeable and kind; friendly service with a smile.   The post Chapter 7 income eligibility gets slightly easier appeared first on Robert Weed Bankruptcy Attorney.

4th Cir.: Koontz v. SN Servicing- FDCPA applies to debts discharged in bankruptcy Ed Boltz Fri, 04/04/2025 - 20:47 Summary: John Koontz received a Chapter 7 discharge,  including for his mortgage,  which was not reaffirmed.  Years later, SN Servicing Corporation (SNSC) sent two letters referring to his mortgage loan, which included past-due fees.   Koontz filed a putative class action, claiming violations of the FDCPA and West Virginia’s debt collection laws. The lower court dismissed the case, finding that Koontz was no longer a "consumer" with a "debt" under the FDCPA because of his bankruptcy discharge and accordingly, the letters were not debt collection attempts. The Fourth Circuit  reversed in part and remanded holding that Koontz remains a “consumer” with a “debt” under the FDCPA, even after a Chapter 7 discharge, because the mortgage lien survives in rem (against the property).   The letters constituted debt collection attempts, as they referred to the loan as a "debt" and requested payment of fees.  Koontz adequately stated a claim under § 1692f (unfair practices), particularly for charging late fees above the contractual limit,  but  did not sufficiently plead a claim under § 1692e (false or misleading representation). The state law claim was also wrongly dismissed, as it parallels the federal definitions and standards. Commentary: Nice win with NCBRC and NACBA as amici. Consumers can still be “obligated” on debts for purposes of the FDCPA even after bankruptcy, due to surviving liens.  Communications suggesting enforcement of a mortgage lien—even post-discharge—can be considered attempts to collect a debt under the FDCPA.  The decision clarifies that mortgage servicers must tread carefully in post-bankruptcy communications, particularly regarding fees and payment processing.   This fits neatly with Judge Beyer's recent opinion from In re Peach (summary forthcoming)  that bankruptcy  does not excuse compliance  with other state and federal laws. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document koontz_v._sn_servicing.pdf (151.87 KB) Category 4th Circuit Court of Appeals

Bankruptcy can be scary, especially when using Chapter 7.  This is known as “liquidation” bankruptcy, and it sounds like your money and assets all go away to pay off your debts.  In reality, there are exemptions that protect your money, though they are limited in how they protect your bank account. When filing for Chapter 7 in Pennsylvania, you can usually choose between state and federal exemptions.  The basic answer is that bank accounts aren’t explicitly protected under either set of exemptions, but your “wildcard” exemption can protect money in the accounts.  The protected amount is usually higher under federal exemptions. For a free review of your case, call the Pennsylvania bankruptcy lawyers at Young, Marr, Mallis & Associates at (215) 701-6519. Can the Bankruptcy Trustee Liquidate My Bank Account? When you file for Chapter 7 bankruptcy, the goal is to sell off property and assets to pay back your debts.  This process is known as liquidation, and it is overseen by a bankruptcy trustee.  This is the person who collects your assets – including accounts – and sells them or cashes them out as needed. People may have all sorts of accounts when filing for bankruptcy, from checking to savings to investment accounts.  Odds are that if you are using Chapter 7 and qualify under means tests, you do not have much to start with in these accounts. While the bankruptcy trustee can legally access and empty your accounts, it might not be worth it. Will Bankruptcy Empty My Bank Accounts? Bankruptcy trustees can access your accounts and take money out to satisfy your debts, but their practical ability to do so might be limited.  If you have only a few hundred dollars in the account, it might not be worth their time or effort. If you have a huge account, it will likely be targeted first because this cash is already liquid and can be spent instead of selling off property first. If you have enough money in your account and can pay down debts, you should likely consider this option before filing for bankruptcy in the first place.  By the time you get to bankruptcy, it is likely your accounts are strained and perhaps not worth liquidating. At the end of the day, you need a place to deposit your paychecks and an account to pay for groceries and other expenses.  Nobody expects you to turn to a cash-only life, and bankruptcy simply cannot take everything you have. Are Bank Accounts Exempt from Bankruptcy in Pennsylvania? When filing for Chapter 7, there are exemptions that take certain property (or certain amounts) out of the pool of what your trustee can liquidate.  This is intended to help you keep the things you need – your clothes, your car, your house, etc. Bank accounts are not explicitly covered, but it is vital to understand the exemptions you can take. Available Exemptions The most common exemptions people want are the homestead exemption to keep their house, a motor vehicle exemption to keep their car, and a “wildcard” exemption to cover miscellaneous things.  There are other exemptions – such as a “tools of the trade” exemption for work materials – that might apply to your given situation, so always work with a Pennsylvania bankruptcy lawyer who can determine what exemptions you need. None of these explicitly cover your bank account, so that usually goes under the wildcard exemption. State Exemption Amounts In Pennsylvania, you can choose between the set of state or federal exemptions, but you cannot mix and match. Pennsylvania has no homestead exemption or motor vehicle exemption, which often makes the federal exemptions better for your situation.  In Pennsylvania, the wildcard exemption is only $300, which would not protect much of your bank account. Federal Exemption Amounts Federal exemptions statutes list the base values, adjusted annually in the federal register. As of April 1, 2025, the exemptions are $31,575 for your house, $5,025 for your car, and $1,675 for the wildcard exemption.  If you don’t have a house, you can add on up to $15,800 of the homestead exemption you didn’t take for a total wildcard exemption of $17,475. Maximizing Exemptions The federal option is therefore the highest option for protecting your bank account.  If you do not have a house or other property to exempt, you can also protect far larger accounts under the federal exemptions. If you want to maximize your exemption for your bank accounts, this is the best option for that.  However, you should always talk to a lawyer to make sure there are no other drawbacks to taking the federal exemptions. Will Filing for Bankruptcy Freeze My Bank Accounts in Pennsylvania? There is nothing about the process of filing for bankruptcy that automatically freezes your accounts by law.  In fact, when you file, an automatic stay goes into place to freeze other people out of making claims on your accounts. At the same time, many people report that certain banks and credit unions have frozen their accounts when they filed for bankruptcy.  This is likely a policy of those institutions, not a bankruptcy rule. Talk to a lawyer before filing bankruptcy about where your money is, what types of accounts you have, and what institutions have those accounts.  It might make more sense to move your money or consolidate it when trying to pay off debts, let alone when actually filing for Chapter 7 bankruptcy. Can I Hide Bank Accounts in Bankruptcy? Trying to hide money from the courts or from the bankruptcy process is never a good idea.  Not only will this likely end your case, it might result in criminal fraud charges.  Any assets or bank accounts you have need to be properly disclosed. Call Our Bankruptcy Lawyers in Pennsylvania for Help If you are considering Chapter 7, call (215) 701-6519 for a free case review with Young, Marr, Mallis & Associates’ Montgomery County, PA bankruptcy lawyers.