Exemptions In Bankruptcy

14 Nov Who Decides About Reaffirming a Mortgage?

Reaffirmation agreementMuch has been written on this blog about "reaffirmation" - the process by which a Chapter 7 debtor formally and in writing agrees to opt out of the protections inherent to a bankruptcy discharge and assume again contractual liability for secured (or unsecured) debts like mortgages and vehicle loans. You should always speak to your lawyer about the wisdom of reaffirmation agreements. In general, to qualify for a reaffirmation you need:
  1. a lender who is willing to enter into a reaffirmation
  2. you need to be current (or close to being current) on your loan
  3. any equity that exists in the collateral should be exempt per the applicable exemption laws
What happens, however, if you and your lawyer disagree about the wisdom of reaffirmation, as evidenced by this email I recently received:
Hi Jonathan- I have enjoyed your writings. We are currently in a chapter 7- 341 set for 12/3. My attorney is very firm that we should not reaffirm 1st mortgage. We are current up to date, etc..is this my decision or hers? If I decide to reaffirm, will she have to sign the reaff as well? Will our difference of opinion on Mortgage Reaffs effect my case?
Here are my thoughts: First, I think that you should sit down with your lawyer to discuss why she is so adamant about not reaffirming. She may have a very good and appropriate reason for her hesitation. I do know some lawyers who discourage reaffirmation - especially if there is negative equity in the collateral - because the bankruptcy discharge serves to eliminate personal liability.
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02 Nov Massachusetts Homestead Act Applies to Pre-Declaration Contracts

Any reader of the Massachusetts Homestead Act must conclude that it only protects homes from contracts incurred after the declaration is recorded. This is not true in the bankruptcy context. This reading was first confirmed by the Van Rye Massachusetts bankruptcy court decision in 1995. A different bankruptcy judge then ruled otherwise in the 1996 Boucher decision, declaring that only Congress could define which debts were discharged and which were not, and nothing from Congress went to the timing of the homestead declaration's filing. I was one of the 20,000 or so attorneys who fell out of our chairs over the shock of this ruling. Two other Massachusetts judges ruled in favor of the 1996 Boucher decision. The Van Rye judge stood firm in his 1997 decision (Fracasso). A number of the cases went up on appeal and the First Circuit held in 1998 in favor of that 1996 Boucher decision (Patriot Portfolio, LLC v. Weinstein). The U.S. Supreme Court refused to accept a further appeal. So it's fine to record a homestead declaration after a contracted debt and protect your home in bankruptcy, but be absolutely certain that the declaration is recorded before the bankruptcy filing.
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Bankruptcy exemptions enhanced

23 Oct Unwritten bankruptcy exemptions benefit debtors

Bankruptcy exemptions enhancedThe law that measures bankruptcy exemptions would be found in law books, you'd think. There are two alternate sets of California bankruptcy exemptions found in the Code of Civil Procedure. The state law exemptions, for instance, permit the debtor to keep $2550 in equity in vehicles, while the California bankruptcy exemptions allow $3300. But the unwritten bankruptcy exemption is added to those numbers: that "exemption" is the cost to the bankruptcy estate of administering that asset in order to turn it into cash that can be distributed to creditors.
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20 Oct California Homestead Amounts To Increase

California Homestead Amounts To Increase
Governor Schwarzenegger signed into law new legislation that raises the amounts that can be claimed as a homestead in California.  The law, Assembly Bill 1046 is one of several new pieces of California legislation aimed at protecting homeowners.
Previously, the equity in your home was exempt from execution or in a bankruptcy filing up to $50,000 for an individual; $75,000 for a married couple (or head of household) and $150,000 for a disabled person or someone 65 or older, or 55 or older with limited income. But, as of January 1, 2010, these limits will go up by $25,000 each; to $75,000, $100,000 and $175,000 respectively.
Note that under current Bankruptcy law, there may be limitations on the amounts listed above if you recently moved to California and purchased your home.
Although this increase will go into effect on January 1, 2010, further changes to exemption amounts will go into effect on April 1, 2010.
Governor Schwarzenegger signed into law new legislation that raises the amounts that can be claimed as a homestead in California.  The law, Assembly Bill 1046 is one of several new pieces of California legislation aimed at protecting homeowners. Previously, the equity in your home was exempt from execution or in a bankruptcy filing up to $50,000 for an individual; $75,000 for a married couple (or head of household) and $150,000 for a disabled person or someone 65 or older, or 55 or older with limited income. But, as of January 1, 2010, these limits will go up by $25,000 each; to $75,000, $100,000 and $175,000 respectively.
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12 Oct Pamela Stewart speaks at The People’s Law School

Pamela Stewart, a Houston/Victoria (Texas) consumer bankruptcy lawyer spoke recently about bankruptcy at The People's Law School sponsored by The University of Houston Law Center  - Center for Consumer Law. Highlights of the session included discussion of the different chapters of bankruptcy, who is eligible to file a Chapter 7...

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