29 November 2016

Customer Service

After filing for bankruptcy, MOST debtors will not be speaking on the phone to MOST of their creditors.  But some will.  And talking to the right person may make the difference between a productive phone call and a hair-pulling experience.

Some of you may need to contact your creditors to arrange for reaffirmation agreements after filing a Chapter 7 Bankruptcy.  Some of you may need to contact your creditors to make post-filing mortgage payments after filing a Chapter 13 Bankruptcy.  Still others may need to call creditors for different reasons entirely.

But no matter why you're calling a creditor, if you dial a generic 800 number to reach customer service - particularly with the bigger national creditors like Bank of America, Wells Fargo, Capital One, Citi, and others - odds are the first person you speak to isn't going to know the first thing about bankruptcy.

Most front-line customer service agents are trained only to answer basic questions, and many of them have little training and little experience, as the revolving doors on those jobs spin quite rapidly.  Even higher level supervisors often aren't particularly helpful.

If you have filed for bankruptcy, the very first thing you should tell any creditor you contact - no matter the reason - is that you have filed for bankruptcy and ask to speak to their "bankruptcy department" or "loss mitigation department".

It's very important that you only do that AFTER you have filed for bankruptcy.  Remember that hiring an attorney to file for bankruptcy is not synonymous with actually having filed your case.  If you tell a customer service agent that you have filed for bankruptcy when you actually have only hired an attorney, you're going to confuse the hell out of the representative.

Once you reach the bankruptcy department, you can ask questions about reaffirmation agreements, make post-petition payments on mortgages, and so forth - and you'll probably have an easier time of it since the people in those departments tend to have better training and are specifically trained to deal with bankruptcy issues.

15 November 2016

Chapter 13 Defaults and Second Chances

If you're the "TL;DR" type - skip ahead to the bottom of this post - that what's written in red.  Because this post contains very important information.

For anyone who has ever filed a Chapter 13 Bankruptcy case, there is an obligation to make monthly plan payments to the Chapter 13 Trustee, who - in turn - makes distributions to certain creditors (read more here on what gets paid and what doesn't get paid in Chapter 13).

Homeowners in Chapter 13 also have an additional duty to make monthly mortgage payments (unless they are surrendering their home or if their future payments are being paid through the bankruptcy (known as a conduit mortgage provision).

A default on either one of these payments will eventually trigger a motion - a motion to dismiss the bankruptcy case, in the event of a default on plan payments, or a motion for relief from stay, in the event of a default on mortgage payments.

For as long as I can remember, conventional wisdom has been that either type of default can be resolved with an objection and the almost certain guarantee that the debtor would be given a second (or third or fourth) chance under what we call a doomsday provision.  A doomsday provision is a period of time (usually 6 months) during which all plan or mortgage payments must be made, and that there are no second chances in the event of a default during the doomsday provision.  Also, plan payments would often have to increase to either accommodate a supplemental claim for the defaulted mortgage payments or to otherwise get the debtor caught up on missing plan payments.

But that conventional wisdom seems to be changing - at least with one judge.  While waiting my turn for a telephonic confirmation hearing several days ago, I was able to listen in on several hearings regarding motions to lift the automatic stay (debtors who had defaulted on their mortgage payments).  From just the handful of hearings I was able to observe, it seemed clear that the judge was no longer willing to hand out doomsday provisions and "second chances" that we had become so accustomed to  and taken for granted in the past.

This is not to say that a motion for relief from stay cannot be defeated.  But it seems that the standard for getting that second chance has been raised significantly.

If I were to summarize and characterize a new doctrine based on the hearings I observed - I would say that motions for relief from stay will be granted unless the debtor can demonstrate a good faith effort to make mortgage payments and remain current on those payments.  Cases in which no mortgage payments have been made since the inception of the bankruptcy case and cases where no mortgage payments have been made in a long time may now be far more susceptible to having the stay lifted, even if an objection is timely filed.

The obvious disclaimer here is that this is an observation based on a handful of hearings in front of a single judge and on a particular type of motion.  But it is not unreasonable to expect that our other judges will adopt a stricter policy on issuing second chances to debtors, and that these policies may also be applied to motions to dismiss on account of defaulted plan payments.

I can't say that I blame this particular judge for this new approach.  I have always cautioned my clients that there is no 100% guarantee that we will prevail on an objection to a motion to dismiss or a motion for relief from stay.  But now, what we used to take for granted as a 99% certainty may have been knocked down quite a few percentage points.

What to take away from this post?

If you default on your Chapter 13 Plan payments or your post-filing mortgage payments - DO NOT TAKE FOR GRANTED that you will be able to prevail in objecting to a Motion to Dismiss or a Motion for Relief from Stay.  Obviously, sometimes things happen that cause these defaults, and I am not at all suggesting that there is a strict "no second chances policy".  But the more you can demonstrate a good faith effort to make good on these payments, the better chances you will have of earning that second chance.

07 November 2016

Moving?

While your bankruptcy case is pending, it is important to keep your attorney apprised of any changes of your contact information.  Not only is it important so that we can keep in touch with you, but so we can also inform the bankruptcy court of any change of address.  This way, you won't miss out on any official notices filed with the court.

But hey - your attorney probably isn't the only important person in your life who you need to make sure has your new address.  And as someone who has moved many times in his life - I know that it's daunting trying to think of a list of everyone you need to send a notice to.  And invariably - some folks get missed.

That's why filing a change of address with the USPS is so critically important.  It's fast, easy, and free (if you go to the post office and do it in person).  If you do it online, it costs a whopping one dollar.

Not only will the post office forward any mail addressed to your old address to your new address, but those envelopes will be specially marked so that you can see who is still sending mail to your old address.  Then you can notify those people as you remember / become aware of them.

In short - there is NO EXCUSE for not receiving important communication from either the bankruptcy court or your attorney just because you moved.  Mail forwarding is easy, and if you want to register for it online, you can do it right here:

01 November 2016

New Median Income Levels, Effective 11/1/2016

New median income level figures went into effect today.

In the State of Wisconsin, the median income level rose for a household of 1 from $44,817 to $47,804.  For a family of 2, it went up from $59,668 to $62,130.  For a family of 3, from $69,492 to $75,230.  And for a family of 4, from $85,961 to $88,133.

What does this mean for you?  Since the median income levels rose across the board, it means people who are hoping to qualify for Chapter 7 will have an easier time qualifying (based on income) now than yesterday.  Median income levels change about once every 6 months.

Although I don't have historical data readily available - my recollection is that these are the highest numbers I've seen since I began practicing 10 years ago.

31 October 2016

How to use CCAP

Happy Halloween!

Either you have been sued or you think you're about to be sued.  Maybe you lost paperwork.  Maybe you moved recently and paperwork has been sent to your old address.  Either way - what can you do to track the status of lawsuits?

If you're being sued in Wisconsin, we've got a handy tool called CCAP.  Although a lot of people aren't wild about CCAP because it's readily-accessible public information about things most people find embarrassing - it's an incredibly helpful tool to keep track of cases so you're not missing out on any important deadlines.

The good news - for my bankruptcy clients - is that your bankruptcy case will not show up on CCAP.  Why?  Simple.  CCAP is for Wisconsin state court cases.  Bankruptcy cases are filed in federal court.

How do I use CCAP?
  1. Point your browser to https://wcca.wicourts.gov/
  2. You'll need to read the agreement and hit the "I Agree" button to proceed.  You might also be prompted to pass a CAPTCHA test used to screen out data-mining robots.
Next, you'll reach the simple search screen.  There is an advanced search option, too, but for most uses, the simple search will work just fine.  If you already know that a lawsuit has been filed against you and have the case number, the quickest way to get specific information about that case is to search by citation (see the blue circle in the screenshot below).  Simply select the county in which the lawsuit was filed from the drop down list, then type in the case number.

The format of each case number is the year the suit was filed (two or four digits), the case type (2 letters, usually CV or SC), and the serial number. You can leave out any hyphens and the first two digits of the year.  If the serial number has any leading zeros, you can omit those, too.  For example: 2016-CV-00001234 can be shortened to 16CV1234.


If you are checking to see IF a lawsuit has been filed against you, or if you just don't know the case number, then search by your name (see the red circle in the screenshot above).  You might want to do multiple searches for alternate spellings of your name (e.g. Jon, John, Jonathan, Jonothon), common misspellings, maiden names, or other aliases you might have used.  If you have a common name, you might want to add your middle initial to help minimize the number of search results.

You'll get a results page that will look something like this.  You can click on any of the case numbers to get more detail about a case.  The results will be sorted by year, with the most recent cases appearing at the top (although they are not necessarily sorted in order of filing date within a single year).



How can using CCAP help me?

There is all sorts of information you can get from CCAP.  First - obviously - to find out what cases, if any, have been filed against you.

Once you find a case and click into it, you'll see a screen that looks like this:



If you've recently moved and you're not getting proper notices of the lawsuit, you can check CCAP to see which address they have listed for you (under PARTY DETAILS).  If they do not have your correct address, you can contact the clerk of courts and find out how to update your address so that you receive the notices you need to receive.

(This particular case was filed very recently and involves a John Doe defendant, so there are no addresses shown here.  Even if there were, I would have redacted them from the screenshot for privacy reasons.)

You can also get addresses and contact information for other parties to the lawsuit whom you may need to contact - including any attorneys who are representing the opposing party (again - not shown in this example).

The other most useful tool is FUTURE COURT ACTIVITY.  This is where you can find out about any scheduled hearings or other deadlines that you need to be aware of.

For example - let's say you have a home in foreclosure.  A judgment was entered 6 months ago.  A Sheriff's Sale is scheduled in about 2 weeks.  Since you have to be out by the Confirmation of Sale, you can use CCAP to watch for the scheduling of the Confirmation Hearing.  Once that is scheduled - it will give you a pretty good idea of when you need to be out in 99% of cases.

24 October 2016

I lost my job. Should I file for bankruptcy now?

Timing when to file bankruptcy - particularly around a period of unemployment or changed employment status - can be tricky, and it really depends on what your goals are.

Let me give you a couple examples...

Let's say you're single person making $30,000 a year, struggling with credit card debt, and worried about wage garnishments.  If you suddenly lose your job, there's no real reason to rush to file for bankruptcy while unemployed.  While unemployed, you're essentially garnishment-proof (you don't have any wages to have garnished).  In Wisconsin, if you qualify for state aid (BadgerCare or food stamps), you can protect yourself from wage garnishment for at least six months after you return to work - giving you ample time to get a bankruptcy case prepared and filed before the garnishment can kick back in.

Let's take the same example, but instead of making $30,000 a year, you're making $50,000 a year.  You're still struggling with debt (remember that insolvency is not JUST about your income, but your debt to income ratio).  But because of your income, you'd be looking at a Chapter 13.  If you know that your job is in jeopardy (e.g. your company is going through a series of lay-offs), there may be a strategic advantage to waiting to file until you've lost your job and can qualify under Chapter 7.  This is something you'd consider if there were no other benefits that a Chapter 13 could confer upon you, and the likelihood of job loss was high and the likelihood of finding new employment soon after was low.

Now let's say that you're currently unemployed, and because of this, you have defaulted on your mortgage.  You really want to keep your house, and you think you'll be employed again soon.  In this case, you'd need to wait until you found employment so that you can fund the Chapter 13 plan that would stop the foreclosure action and get you caught up on the mortgage arrears.

These are all over-simplified examples.  Even if you think one of these three describes you perfectly, there are all sorts of nuanced details that could change an attorney's recommendation or advice.  The point is to make sure that you communicate your goals and wishes clearly with your attorney, and that you not only discuss your current employment status, but also any expected changes in employment status in the immediate future.

10 October 2016

New 341 Hearing Location for Oshkosh Chapter 13s

Right on the heels of writing this post about why some hearings are held inside an airport conference room... we received news today that the hearing location would be moved effective January 2017.

Hearings next year will be held at:
Winnebago County Courthouse
415 Jackson St.
Room 500
Oshkosh, WI 54901

The CHANGE only affects people who are filing Chapter 13 and who reside in Winnebago, Outagamie, Fond Du Lac, Waupaca, Waushara, Green Lake, and Marquette Counties.  However, this means that all debtors filing for bankruptcy who reside in the aforementioned counties - both Chapter 7 and Chapter 13 - will have their hearings at the Winnebago County Courthouse (just different room numbers).

The Oshkosh Chapter 13 calendar is typically the last Friday of the month.  Therefore, I will not update the map on this page until the end of 2016, since people with hearings in these final months of 2016 may still need directions to Wittman Regional Airport, and folks on the January 27th calendar will have plenty of time to check back for updated information on that page.

Hearings are typically scheduled about 4-6 weeks out.  If you reside in one of the counties listed above and are about to file for Chapter 13 bankruptcy, expect that your hearing will be at the Winnebago County Courthouse and NOT Wittman airport if you file your bankruptcy case toward the end of December 2016 or later.

03 October 2016

Electronic Documents

Electronic documents are awesome.  They're friendlier to the environment.  They're cheaper than the cost of paper and ink / toner.  They're easier to store and take up less space.

Over the past several years, I've embraced several methods to reduce physical paperwork in my office and switch over to electronic documents whenever possible - and I will continue to do so.

However, there are two types of documents that I frequently receive from clients that need to stop:

  1. Documents requiring your signature.  If I send you a document that needs to be signed, I need to have the original "wet" signature returned to me.  That means either mailing it back or dropping it off in person.  Unless you're digitally signing a document using e-sign equipment in my office, all ink-signed documents should be returned to my office in actual paper and ink form.  Note - most documents do not require your signature.  I can take pay-stubs, tax returns, vehicle titles, real estate documents - all of this stuff electronically.  But any special forms, affidavits - anything that needs to be filed directly with the bankruptcy court and requiring your signature - those items I need to get the originals back on.
  2. Photographs of Documents.  Admittedly, this one isn't so much a rule as it is an annoyance.  The image quality of most cell phone pictures of documents I receive is not very good, and the image is distorted if the document is folded at all.  Converting image files to PDFs that retain enough image quality to be readable by the Trustee is sometimes not possible.  And even when it is, it's enough of a hassle as to not be worth it.  If you don't have a scanner - that's fine.  Bring the document in to my office and let me scan it.  There's no charge for it, and I'll have a clean, high quality image to send to the Trustee.

19 September 2016

August Foreclosure Statistics

Foreclosure filings in the state of Wisconsin jumped up 27% over July to a four month high last month.  In August, foreclosure filings for Brown County (Green Bay) increased 58%, up almost triple in Calumet and Marinette, more than tripled in Langlade, up ten-fold in Kewaunee, and doubled in Manitowoc.

12 September 2016

Fundamental Misunderstandings

No one expects the average person without legal training and experience to be an expert on bankruptcy.  I have, however, encountered a number of questions in the past couple of weeks that demonstrated a fundamental misunderstanding of what bankruptcy is and how it works.  So I thought now would be a good time to clarify a few things.

"Am I likely to win my bankruptcy case?"  OR  "How will the Trustee decide if my bankruptcy goes through or not?"

Bankruptcy is NOT an adversarial area of law - at least not in the vast majority of cases.  Bankruptcy is highly bureaucratic, and although it technically doesn't fall into the realm of "administrative law", that's basically what it is.

In bankruptcy, an individual files a petition with the bankruptcy court.  Once filed, a discharge is PRESUMED to be the end-result, and really only doesn't happen in a small set of circumstances and mostly only if/when a creditor or other party objects to that discharge.

Assuming you've hired an attorney to determine that you meet eligibility requirements, disclosed all of the relevant information, provided all of necessary paperwork, etc. - the rest of process should be relatively simple.  A lot of "pro forma" stuff to make sure all of the i's have been dotted and t's crossed.  There are opportunities for creditors to file objections, or for the Trustee to object to exemptions, or for disputes over the Means Test.  But in the majority of cases, these things never happen.  A good and experienced bankruptcy attorney will have already litigated the case before he files the bankruptcy case, ensuring that whatever issues may affect your bankruptcy case and your ultimate result have been addressed or mitigated in some way before the petition is filed.

In other words, this isn't a "win" or "lose" situation.  You get the discharge automatically unless someone steps in and objects to the discharge.  Furthermore, the Trustee doesn't make any sort of determination about your discharge or qualifications.  Trustees (especially in Chapter 7) are there to take your testimony and look for assets or preferences that he/she can recover - that's it.  The scope of their duty is extremely limited.

"How do my creditors get paid?"

There MIGHT be payments to unsecured creditors if you file Chapter 13, or if your Chapter 7 case has non-exempt assets or recoverable preferences.  Also, you might reaffirm secured debts or other debts might not be dischargeable, and therefore you'll remain responsible for them after your case is filed.  But I'm not talking about any of these exceptions.

There is a common misconception that whatever is "discharged" in bankruptcy must be paid from somewhere.  And that is not the case.  A bankruptcy discharge is basically a formal court order that requires most of your creditors to write-off the debts you owe them without being paid, and to cease and desist any further collection efforts for those debts.

Creditors make their money from interest and other miscellaneous fees they charge, and if a lender's business is doing well, those forms of revenue will wash out any debts that get discharged in bankruptcy.

"How/when does the judge determine what debts are discharged?"

Again, I'm going to stick to Chapter 7 just to keep things easy and clean.  Many of these questions get a bit more complicated when we talk about Chapter 13.

Most debts are dischargeable.  This includes secured debts, such as mortgages and auto loans.  Most people will "reaffirm" on secured loans (and continue to pay them) in order to retain the collateral that secures the loan.  Reaffirmed debts are not discharged by virtue of the reaffirmation agreement.

Apart from that, the bankruptcy code specifically lists all of the types of debts that are not dischargeable.  That list can be found at 11 U.S.C. § 523.  It's a pretty long list, but for most people, there are only three types of debts that aren't discharged: student loans, certain taxes, and domestic support obligations.

Of the items listed under section 523, all of them except for three are statutory.  That means that if you owe a student loan, it is automatically not part of the discharge.  Your student loan creditor is not required to go to bankruptcy court and have their debt declared non-dischargeable - it's automatic.  No judicial determination required.

If a creditor asserts that their debt is non-dischargeable under any of those subsections, and you disagree, you can file an action with the bankruptcy court for a violation of the discharge injunction, and then have the court rule whether or not the debt in question is non-dischargeable.

There are only three subsections of 523 that require a judicial determination: 523(a)(2), 523(a)(4), and 523(a)(6).  523(a)(2) is for fraudulently-incurred debt.  523(a)(4) is for fraud committed while acting in a fiduciary capacity.  523(a)(6) is for willful or malicious injury.  Any creditor who wants their debt declared non-dischargeable under one of those three subsections must get the judge to make a ruling in their favor.