#TrickleUPBailOut


By Ryan C. Wood

As I sit here pondering my future and the shutdown of San Mateo County, California because of 80 total known coronavirus infections I have some thoughts about how the inevitable bailout should look like. I am sure there are more criteria then what is listed below that are a good idea. The point is no more handouts to multi-billion corporations with the false expectation that the money somehow trickles down to lowest person on the ladder. Do not tease us with a mere $1,000 one-time payment and then give corporations $770 billion or more. Give us the people ALL of the money and let us spend it in support of the economy.

Keep the $1,000 payment proposed for people given that will only pay for my clients’ phone bill, cable bill and maybe there will be some left over for a car payment.  Instead give actual people, you know, the humans living in the United States the money being proposed to be given to corporations.  We all have freedom of choice in a free market right?  Us working people are supposed to choose how to spend our money creating winners and losers in the free market, right?  Trickle down is a joke. CEO takes millions along with upper management then whatever is left goes to page wages that are not even good? 

Do you want to drink water from melted snow thousands of feet high in the Sierra Nevada Mountains or drink water that is left over from trickling down thousands of miles picking up every single harmful thing possible?    

Clearly we need a #TrickleUPBailOut based upon the following criteria: 

  1. #TrickleUpBailout – MONEY TO THE PEOPLE

What I am saying is that hard working tax paying Americans should get the bailout money period.  Then those hard working tax paying Americans can choose what to do with that money.  Keep the proposed $1,000 given I know the amount proposed to be given to corporations spread out over those humans that need it will be far more money. How those in need who receive the billions spend the money in our free market will determine the winners and losers. Not the government choosing which corporations to prop up on the tax payer dime regarding the free market.   There will be winners and loser.  Let our free market and freedom of choice be how we move forward after the coronavirus catastrophe.  That is how it is supposed to work.  Not the other way around.  Please do not give billions of tax payer dollars to a handful of corporations under the guise of too big to fail yet again.  The government is not supposed to create winners and losers.  We have a free market right?  Tax paying hard working voters are supposed to make these decisions right?  Give the bailout money to real people that have hearts, breathe and live, vote, pay taxes and need help given the coronavirus catastrophe.  Do you not trust us to exercise our rights and freedom of choice?   

2. #TrickleUPBailOut – ALL PEOPLE GET THE BAILOUT FUNDS IF THEY QUALIFY

All people that meet the following criteria get the bailout funds regardless of legal status, race, religion, gender, sexual orientation, ever convicted of a crime or any other way to treat a human different from another human.  Let us start a new normal from the ashes of the coronavirus catastrophe that truly is equal to humans that qualify just because they are simply a human that live and works in the United States.  Disease and natural disasters that hurt humans do not care about any of these things.  Disease and natural disasters do not discriminate; only humans do.   

The application for #TrickleUPBailOut funds will not include a single question about legal status, race, religion, gender, sexual orientation, ever been convicted of a crime type questions period.

You live here in the United States.  You lived it you get it.         

3. #TrickleUPBailOut – NO BAILOUT FOR TRUST FUND BABIES

Sorry, but it must be said.  Good for you, not hating, but trust fund babies should not get a dime of tax payer money as a result of the coronavirus catastrophe.  Your good already given someone else in your life was able and nice enough to take care of you and provide for your every financial need.  If you are a trust fund baby that has to work to get by in life then that is different of course.      

4. #TrickleUpBailOut – NO BAILOUT MONEY FOR CERTAIN HIGH INCOME EARNERS

I am not going to say a number but we can all agree that someone who has a gross income of $300,000 a year or more does not need any bailout money, period.  I will let other people elected to make such decisions and set a number.  The point is if you make that much money you do not need a bailout.  Bailout money should be reserved for those in need of it most.  There are exceptions of course.  If you lose your job and all income then ……..

5. #TrickleUPBailOut – IF YOU LOSE YOUR JOBE YOU QUALIFY

If you lose your job during the coronavirus catastrophe you automatically qualify, period.  No questions asked.  Lose job = #TrickleUPBailOut money. 

I am sure there are plenty of other criteria that make sense to make sure all bailout tax payer dollars actually go to benefit tax payers that actually need it; period.  These five things are probably just a good start.  The point is why trust some CEO getting paid $30 million a year to decide what to do with tax payer bailout money?  As a bankruptcy attorney I am already fielding calls and the coronavirus has already caused bankruptcy filings.   I am sure there will be more to come, but giving bailout money directly to humans in need may reduce the number of future bankruptcy cases.  Even if bailout funds do not prevent bankruptcy filings who cares?  Taxing paying hard working people are the ones that deserve every penny of any bailout money from the government.      

COVID – 19 Coronavirus Economic Consequences Are Worse Than Medical Consequences

By Ryan C. Wood

Hopefully factually information about the leading causes of death will provide some light and sanity regarding the response to the Coronavirus. In the United States the most dangerous things to you during the Coronavirus hype and hysteria to your health and life are your own eating, exercise habits and then just living life.  Forgive me if I argue the current reaction to COVID-19 is disingenuous. I am also not advocating doing nothing about the Coronavirus. The fact is if 500 people die worldwide each day from the Coronavirus that is still nothing compared to what are the leading causes of death. It is about priorities and the greater good.  If the world and world governments actually cared about your health declarations of emergency should have been issued long ago for the list of leading causes of death that already exist.  Instead billions of dollars are made and the world profits from things that are the leading causes of your death.   Heart disease, then cancer and then accidental death kill about 119,000 people in the United States each month (CDC).  These are the top three things you need to be concerned about yesterday, today and tomorrow. What is the point of quarantine, travel restrictions and hysteria when much more serious and widespread causes of death exist?

How many economic casualties resulting from the Coronavirus hype and hysteria will I as a bankruptcy attorney have to treat by filing bankruptcy for them?

Diarrhea, the 5th worldwide leading cause of death will kill more people worldwide then the Coronavirus ever will.  Google it and read for yourself.  The Center for Disease Control provides 2,195 children, just children, die each day worldwide due to diarrhea.  EACH DAY!!!     

Worldwide preterm birth complications are the 8th leading cause of death. 

I understand much is not known about the Coronavirus. What I have no doubt about is there will be far too many bankruptcy filings due to the Coronavirus hype and hysteria.  The truth is they were probably financially at the teetering point already and then this happened.  Hype and hysteria they had no control over will devastate their financial life.  The same thing is ironically true for those that the Coronavirus is medically harmful to.  The truth is they were probably medically at the teetering point already and then the Coronavirus happened and it killed them.  Their immune system was already compromised.  I hope that I do not have an uptick in business given the hype and hysteria about the Coronavirus.  Nothing at this point leads me to believe there will NOT be far more serious economic devastation than medical devastation resulting from COVID-19.    

Top Ten Causes of Death in the United States

  1. Heart disease: 647,457 a year or 53,955 a month
  2. Cancer: 599,108 or 49,926 a month
  3. Accidents (unintentional injuries): 169,936 or 14,161 a month
  4. Chronic lower respiratory diseases: 160,201 or 13,351 a month
  5. Stroke (cerebrovascular diseases): 146,383 or 12,198 a month
  6. Alzheimer’s disease: 121,404 or 10,117 a month
  7. Diabetes: 83,564 or 6,694 a month
  8. Influenza and pneumonia: 55,672 or 4,639 a month
  9. Nephritis, nephrotic syndrome, and nephrosis: 50,633
  10. Intentional self-harm (suicide): 47,173

Heart Disease – Leading Cause of Death in the United States

Guess what?  You are your own worst enemy.  Not the Coronavirus or anything you can catch from another human being.  The Center for Disease Control provides the leading causes of heart disease are: diabetes, overweight and obesity, unhealthy diet, physical inactivity and excessive alcohol.  There should be a declared national emergency about the pandemic of food abuse given the number of people dying.  The food killing 54,000 people in the United States a month that leads to heart disease should be quarantined until people eat healthier food.  Imagine that.  That would be tax dollars well spent to ensure more people in the United States live each year.  People should be quarantined and forced to exercise.  Obviously the government and people are very concerned about your medical wellbeing, right? 

What are the leading causes of diabetes?  Eating habits and lack of exercise; just sayin.

Cancer

Cancer is the second leading cause of death in the United States.  The leading causes of cancer are smoking/tobacco, diet and physical activity, sun and other types of radiation and viruses and other infections.  49,926 people in the United States die each month and there is no state of emergency declared.  When will a state of emergency be declared? 

Accidental Death                            

This is the third leading cause of death in the United States.  Wrong place at the wrong time and POW you are dead.  Please think about how you are driving to hoard that toilet paper or other items at the store.  So hey, yeah, do not go to work because of the hype and hysteria but continue to drive like a maniac contributing to the 14,166 accidental deaths in the United States a month.  Or take every crazy precaution possible then get crushed to death by a falling rock in Yosemite National Park.  That is 427 people every day dying.     

Did you known the Center for Disease Control estimates there are 38,000 new HIV/AIDS infection each year in the United States?  That is 3,167 a month.  Why is there no state of emergency?  Why was there no state of emergency declared years ago about HIV/AIDS?

So part of the issue here is how the limited resources we have are used.  Why is the world so concerned about the Coronavirus when millions of people suffer from known leading causes of death each year without such fanfare?  This is nothing new but for some reason a new virus is stealing the headlines.  Is this the new normal?  Who cares about the actual and devastating leading causes of deaths and instead declare states of emergency, initiate quarantines for any new virus? 

Student Loan Claims Should Be Treated In A Separate Class In Chapter 13 Bankruptcy Plans


By Ryan C. Wood

The following discusses listing and treating student loan claims in chapter 13 bankruptcy cases as a separate class and separate claim all by itself in a chapter 13 plan.  By creating a separate class the treatment of the student loan claims will be different than NOT substantially similar general unsecured claims like credit cards or medical debts.  The advantage of this is designating more of the plan payment to a not dischargeable debt, student loans, than debt that is dischargeable credit cards, medical debt or personal loans for the benefit of the bankruptcy filer.  Arguably the plain, unambiguous language of the Bankruptcy Code allows this.  “If the language has a plain meaning or is unambiguous, the statutory interpretation inquiry ends there.”  CVS Health Corp. v. Vividus, LLC, 878 F.3d 703, 706 (9th Cir. 2017) (citation omitted).

First Let Us Talk Bankruptcy – Broadly Speaking That Is

The filing of bankruptcy is for debtors; the bankruptcy filers.  Not creditors or other parties-in-interest.  Bankruptcy proceedings are intended to give debtors a “fresh start.” Goudelock v. Sixty-01 Ass’n of Apartment Owners, 895 F.3d 633, 637 (9th Cir. 2018) (citing Grogan v. Garner, 498 U.S. 279, 286 (1991)); Dept. of Health Servs. v. Jensen (In re Jensen), 995 F.2d 925, 928 (9th Cir. 1993).  Bankruptcy proceedings are intended to grant debtors a “fresh start,” Grogan v. Garner, 498 U.S. 279, 286 (1991), and, as a result, the Bankruptcy Code “is to be construed liberally in favor of debtors,” In re Devers, 759 F.2d 751, 754 (9th Cir. 1985).

It is less and less likely the Bankruptcy Code will be construed liberally in favor of debtors.  This is a generalization and of course there are plenty of examples of liberal interpretation for the benefit of debtors.  Just like in the real world in which corporations that do not live, breath or die dominate the argument for the almighty buck.  A profit before people is the name of the game and it is pervasive.  How can bankruptcy be immune from this when the largest financial institutions are the main creditor players?  It cannot be.  Interpretations are more and more in favor of large multi-billion conglomerates.

Model Chapter 13 Plans 

Model chapter 13 plans were created and are universally used from jurisdiction to jurisdiction.  Some vary widely while others mirror the national model chapter 13 plan.  Unfortunately most model chapter 13 plans do not provide for a separate class listing for student loans.  Some plans do include a section that provides language such as: Class 6 includes designated nonpriority unsecured claims, such as co-signed unsecured debts, that will be treated differently than the other nonpriority unsecured claims provided for in Class 7. The claim holder of each Class 6 claim and the treatment of each claim shall be specified in section 7, the Nonstandard Provisions.  The low hanging fruit is a student loan that is co-signed.  This article does not address this circumstance given there should be no argument that co-signed student loans may be listed in a separate class with different treatment then general unsecured creditors.

As always the time and money to make the argument student loans may be listed in a separate class and treated different than general unsecured creditors could be substantial.  I cannot work for free and almost no client can afford to pay me to make this argument on their behalf.  If it goes bad then the only option is to appeal requiring even more time and money.  So what client of mine has the money to do that?  Try none.  There are always bigger fish to fry for bankruptcy filers and there are absolutely no moral victories.  There is either food on the table or there is not food on the table. 

Additional Provisions of a Model Plan

The additional provisions section of chapter 13 plans is where the terms of the chapter 13 plan can be varied based upon the bankruptcy filers circumstances.  This section was created to bankruptcy attorneys could not sneak in provisions or treatment of claims that are not supported by the Bankruptcy Code.  It is good and bad.  The result is if there are any nonstandard or provisions you need to add to actually present your client well the language is front and center for scrutiny.

If you include language in the “Additional Provisions” section of your model chapter 13 plan the chapter 13 trustee’s office will most likely object to the language and not recommend confirmation of the chapter 13 plan.  Sometimes judges will preapprove certain additional provision additions for issues that come up over and over again to streamline the process and allow chapter 13 trustee’s to recommend confirmation of a chapter 13 plan without a formal hearing.  Otherwise, the trustee’s office will force there to be a confirmation hearing and the bankruptcy judge assigned to the case will make a decision as to whether the language in the additional provision can be confirmed as part of the plan.  This will probably happen even though every creditor was served with the chapter 13 plan and no creditor objected to their treatment in the plan.  What you say!?  If a creditor does not accept their treatment they have to object right?  You would think creditors should have to object to chapter 13 plans and not accept their treatment in a chapter 13 plan.  No, no.  Why hire and pay an attorney to file an objection to confirmation when the trustee and court will do it for you?  At the same time chapter 13 trustees’ and the Court have a duty to uphold the law.  Also, some creditor attorneys do things to just earn a buck that are not necessary and only increase costs of administration of bankruptcy cases.  So I am torn on whether I want creditor participation in a chapter 13 case or not.   I do believe creditors should have to object to their treatment in chapter 13 plans though.       

The Bankruptcy Code

So this is all about interpreting the Bankruptcy Code as it exists.  Arguably the plain language of the Bankruptcy Code provides student loans should be listed as a separate class with their own treatment.  Let me explain.

Section 1322(b)(1) provides:

(b) Subject to subsections (a) and (c) of this section, the plan may— (1) designate a class or classes of unsecured claims, as provided in section 1122 of this title, but may not discriminate unfairly against any class so designated; however, such plan may treat claims for a consumer debt of the debtor if an individual is liable on such consumer debt with the debtor differently than other unsecured claims;

The plain language provides designation of a class or classes of unsecured claims.  So more than one class of unsecured claims can be part of a chapter 13 plan.  Then it says as provided in section 1122.

Section 1122 Classification of Claims or Interests provides:

(a) Except as provided in subsection (b) of this section, a plan may place a claim or an interest in a particular class only if such claim or interest is substantially similar to the other claims or interests of such class.

(b) A plan may designate a separate class of claims consisting only of every unsecured claim that is less than or reduced to an amount that the court approves as reasonable and necessary for administrative convenience.

Section 1122 as referenced in 1322(b)(1) only allows classes of claims of the same nature or character, substantially similar to the other claims or interests of such class.  This is language is plain, taking the ordinary meaning of the words and is unambiguous right?  Okay wonderful; moving on now to defining the key term in the language above.  What is the definition of substantially similar?  Might we have case law on the definition of “substantially similar?”  Yup. 

Various Courts have defined “substantial similarity” to mean the legal nature of the respective claims.  See In re McKenzie, 4 B.R. 88 (Bkrtcy.W.D.N.Y., 1980, Creahan, B. J.); In re Iacovoni, 2 B.R. 256 (Bkrtcy.D.Utah, 1980, Mabey, B. J.); In re Montano, 4 B.R. 535 (Bkrtcy.D.D.C. 1980, Whelan, B. J.); In re Barnes, 7 B.C.D. 961 (D.D.C. 1981). 

So for claims to be listed in the same class they must have the same legal nature of the respective claims.  Student loans are not substantially similar to credit card, personal loans or medical debts in anyway and therefore should not be listed in the same class.

Student loans are really non-consumer debt given student loans are incurred to further ones education and seek higher income.  Student loans are therefore incurred for income purposes or business purposes rather than consumer goods and services. 

Student loans are by law are NOT dischargeable.    

How can student loans possibly be in the same class as dischargeable general unsecured claims like credit card, personal loan or medical debts?  There is nothing substantially similar as to the legal nature of the claims.  So student loans must be listed in a separate class with their own treatment.

(a) Except as provided in subsection (b) of this section, a plan may place a claim or an interest in a particular class only if such claim or interest is substantially similar to the other claims or interests of such class.

“…. in reliance of the 15th Ed. Collier’s comment on § 1122, the court held that all unsecured creditors with claims of the same nature or character have a similar right to the assets of the estate.  See  In re Iacovoni, 2 B.R. 256 (Bkrtcy.D.Utah 1980)  Conversely claims of a different nature or character have different rights to assets of the estate.

Plain Language of Bankruptcy Code Is Clear

You have read it for yourself.  How can a not dischargeable debt incurred for entirely different reasons be substantially similar to general unsecured claims like credit cards, medical debts or personal loans?  Clearly the Bankruptcy Code says different types of claims should be listed in separate classes with arguably different treatment.  Furthermore, if you propose a chapter 13 plan with a separate class for student loans and no creditor objects to the plan what is the problem?  If a creditor does not object to their treatment they are accepting the terms of the chapter 13 plan. 

Confirmation of A Chapter 13 Plan With Student Loans Listed As A Separate Class

As mentioned above the chapter 13 trustee’s office will most likely object to confirmation of the chapter 13 plan if the plan lists student loans as a separate class with a separate treatment in the additional provisions section.  See below and Bankruptcy Code Section 1325(b)(1)(B).  As long as the plan is paying all of the debtor’s projected disposable income to be received in the applicable commitment period to unsecured creditors the chapter 13 plan should be confirmed.  A chapter 13 plan with student loans listed in a separate class will still meet the requirement for confirmation as provided in Section 1325(b)(1)(B).       

Bankruptcy Code Section 1325(b)

 (1) If the trustee or the holder of an allowed unsecured claim objects to the confirmation of the plan, then the court may not approve the plan unless, as of the effective date of the plan—

(A) the value of the property to be distributed under the plan on account of such claim is not less than the amount of such claim; or

(B) the plan provides that all of the debtor’s projected disposable income to be received in the applicable commitment period beginning on the date that the first payment is due under the plan will be applied to make payments to unsecured creditors under the plan.

Of course there is more.

Unfair Discrimination

Bankruptcy Code Section 1322(b)(1) provides:

(b) Subject to subsections (a) and (c) of this section, the plan may— (1) designate a class or classes of unsecured claims, as provided in section 1122 of this title, but may not discriminate unfairly against any class so designated; however, such plan may treat claims for a consumer debt of the debtor if an individual is liable on such consumer debt with the debtor differently than other unsecured claims;

Now that we have separate classes you may not discriminate unfairly against any class so designated.  If you are bankruptcy attorney practicing in the Ninth Circuit undoubtedly the case of In re Wolff, 22 B.R. 510 (9th Cir. BAP 1982) will be cited.  This is an absolutely horrible case that really should not be applied to listing student loans as a separate class with a separate treatment.  In Wolf the debtor proposed to treat creditors with exactly the same types of claims and rights differently in the chapter 13 plan.  In Wolf the plan proposed to pay just two general unsecured creditors while paying nothing to all other general unsecured creditors.  Yeah, that is unfairly discriminating against creditors based upon those facts.  In Wolf the debtor treated two creditors more or less as “Critical Vendors” but failed to provide evidence of why the debtor would fail without the different treatment of exactly same type of claim/creditor.  In Wolf the Court provided: “We believe that the better result is that there will be occasions where unsecured claims might be classified and treated differently, even though the legal character of the claims is identical and the treatment is discriminatory, but not unfairly so.”  In re Wolff, 22 B.R. 510, 512 (9th Cir. BAP 1982).  Wolf brought us the following: In re Kovich, 4 B.R. 403 (Bkrtcy.Mich. 1980), and refined in In re Dziedzic, 9 B.R. 424 (Bkrtcy.Tex. 1981), more reasonably sets forth the interpretation to be placed upon § 1322. The test is (1) whether the discrimination has a reasonable basis; (2) whether the debtor can carry out a plan without the discrimination; (3) whether the discrimination is proposed in good faith; and (4) whether the degree of discrimination is directly related to the basis or rationale for the discrimination.

So list student loans as a separate class with the exact monthly amount as general unsecured creditors receive and there will be no discrimination at all; just equal payments to separate classes paying unsecured creditors all of the debtor’s projected monthly disposable income.  Done, chapter 13 plan confirmed leaving the debtor’s right to a fresh start intact and the Bankruptcy Code being liberally interpreted for the benefit of the bankruptcy filer. 

American Chopper: The Latest About Paul Teutul, Sr. Chapter 13 Bankruptcy Case

By

There are a number of updates below with a more detailed history of this chapter 13 bankruptcy filing.  There is no shame in merely following the law to seek relief in bankruptcy.  Please keep in mind that Mr. Paul Teutul Sr. is paying 100% of his debts in his chapter 13 debt adjustment or reorganization case. There are many myths and fake news floating around about bankruptcy and Mr. Teutul’s bankruptcy case.  I am confident what follows is the most accurate analysis of what has taken place to date.  In this case Mr. Paul Teutul, Sr. proposed and the Court approved the sale of his 38 acre estate to pay ALL allowed creditor claims.  This is Bankruptcy Case No. 18-35310 filed in the Bankruptcy Court for the Southern District of New York on February 27, 2018.

As of November 15, 2019

On July 1, 2019, the Court entered an order approving the sale of Mr. Paul Teutul Sr.’s New York 38 acre property along with some personal property for $1.5 million.  The sale included some of the equipment to maintain the property such as a couple plastic boats, an ATV, bulldozer and JD tractor.  So that is more or less that assuming the sale is closed.

American Chopper’s Paul Teutul, Sr. is now free to hit more home runs.  Yes, home runs.  See, Mr. Paul Teutul, Sr. keeps swinging the bat.  He hit some home runs and then struck out a couple of times.  He then followed the law to seek relief from his creditors to sell his house to pay off all his debts and move on.  It is just that simple.  It is impossible to hit a home run each time you come to the plate.  You do have to keep swinging or you will never hit a home run.  Keep swinging Paul Teutul Sr.  Keep swinging!!!!!!

June 20, 2019 Update

On June 5, 2019, a Fourth Amended Chapter 13 Plan was filed to incorporate terms governing the sale of Mr. Teutul’s real property.  As required as part of the chapter 13 plan and required by the Bankruptcy Code, on May 20, 2019, a motion to sell Mr. Teutul’s 38 acre estate was filed, and on June 18, 2019, a hearing was held regarding Mr. Teutul’s motion to sell his 38 acre property and sell other personal property along with it to fund his chapter 13 plan of reorganization.  I am please to report the court granted the motion to sell.  Unlike some other articles with click-bait titles this chapter 13 case is not a nightmare and the case was never neglected.  Sure, no one really wants to file for bankruptcy protection.  It is the law though and Mr. Teutul just like anyone else seeking bankruptcy protection is just following the law.  Many times bankruptcy is a last resort and that means bankruptcy cases get filed at the last second or without months and months of planning.  Large corporations filing chapter 11 cases to reorganize their debts even have agreements with creditors already worked out prior to the chapter 11 even being filed.  For us small fish that is not how it goes down.  Nevertheless, Mr. Paul Teutul, Jr. is now waiting for his Fourth Amended Chapter 13 Plan filed on June 5, 2019, to be confirmed or approved by the bankruptcy court.  The chapter 13 plan should be wrapped up in August or September 2019 now that the motion to sell was granted and the plan can be funded.  There should not be too many more issues in this case.  Congratulations Mr. Paul Teutul, Jr. and we wish you well in your future endeavors.

May 27, 2019 Update

This might be a little premature, but I would like to congratulate Mr. Paul Teutul, Sr. on successfully reorganizing his debts.  Sadly most of the mainstream media will just provide that Mr. Teutul filed bankruptcy without any real information about what took place.  These are sadly click-bait type articles that I see all the time.  So, this might be a little premature, but I have the pleasure to report Mr. Teutul, Sr. filed a motion to sell his real property 38 acre estate to fund the proposed chapter 13 plan in which his creditors will be paid in full on May 20, 2019.  The hearing on the motion to sell the property is scheduled for June 18, 2019, at 10:30 a.m.  Assuming the motion to sell the real property is granted and the chapter 13 plan will fund as a result this case is all but wrapped up.  Unfortunately prior to the motion to sell the real property was filed the chapter 13 trustee filed a motion to dismiss the case for undue delay that is prejudicial to creditors pursuant Section 1307(c)(1).  I really do not like these motions filed by chapter 13 trustee’s given in reality no creditor is complaining and no creditor is prejudiced.  The successful completion of and funding the chapter 13 plan on file in this case is the single most efficient and quickest ways creditors of Mr. Paul Teutul, Sr. will get paid what they are owed at this point.  Creditors have filed claims to be paid what they are owed and do not have to continue to pursue their claims under state law.  This will save the creditors thousands and thousands of dollars in attorneys’ fees and costs with a guarantee of payment of the amounts they are owed.  The problem is this case was timing though.  It took too long for the real property to be sold and fund the proposed chapter 13 plan.  So arguably creditors are or were prejudiced.  I just do no like chapter 13 trustee’s stepping into the shoes of creditors and making this argument and filing a motion to dismiss a case.  At the same time a chapter 13 case cannot just be out there barring creditors from seeking payment if there is no reasonable likelihood of a chapter 13 plan being confirmed or approved.  It is a delicate balance and creditors should enforce their rights and seek dismissal of cases rather than the chapter 13 trustee; my two cents.  Hopefully the court in this case will continue the hearing on the motion to dismiss the case and allow the hearing on the motion to sell Mr. Teutul, Sr.’s real property so the chapter 13 plan can fund and be approved……….

February 1, 2019 Update

Two issues were resolved recently. The first is regarding Leonite Capital, LLC. See below for more information about their claims. On December 19, 2018, the bankruptcy court entered an order denying Leonite Capital, LLC’s late filed proof of claim. The state court lawsuit against Orange County Choppers will continue though.

The other major development was Paul Teutul Sr. and JTM Motorsports entered into a settlement agreement for up to $30,000 after going through mediation. An initial payment of $11,726.15 will be paid to JTM upon the Court approving the settlement. After that invoices for parts totaling approximately $6,273.85 will be submitted to Paul Teutul Sr.’s bankruptcy attorney for payment. The remaining portion of the settlement amount will be held in trust to potentially pay other alleged outstanding invoices JTM is allegedly liable for unless the invoice holders provide releases saying JTM is not responsible for paying the invoices…….. Paul Teutul Sr. was supposed to pickup the 2009 Corvette ZR1 around January 19, 2019.

Issues Remaining

Mr. Paul Teutul Sr.’s chapter 13 debt adjustment or reorganization case is progressing and is running into an issue that is not uncommon under his circumstances. There are a number of ways to fund or pay a proposed Chapter 13 Plan and to meet obligations to creditors. The most common way is from normal monthly income. The bankruptcy filer makes a payment each month to the Chapter 13 Trustee assigned to the case and then the Chapter 13 Trustee disburses the funds to creditors according to the terms of the chapter 13 plan. The second most common way to fund a chapter 13 plan is by selling assets like real property. That is what Mr. Paul Teutul Sr.’s chapter 13 plan has turned into after unsuccessfully seeking to modify the terms of the secured loan on his property. The problem is you will only get so long to sell the asset to fund the chapter 13 plan. This is a jurisdictional and circumstantial issue so I will not get into how long someone will have to sell property, but generally it is not an open ended proposition. Part of filing for bankruptcy is bringing certainty to right to payment of debts so there generally will be no approval or confirmation of a plan to sell an asset to fund a plan that is indefinite.

December 13, 2018 Update

I wrote a previous article about American Chopper and Orange County Chopper’s Paul Teutul Sr.’s chapter 13 bankruptcy filing. There are various updates below as things have played out. You may have read that Paul Teutul, Jr. filed bankruptcy and I can confirm that it is technically true. Unfortunately the mass media does almost no research anymore and just spits out half-truths as fact. I have reviewed the bankruptcy documents filed and can tell you firsthand the filing is by who we all know as Paul Teutul, Sr., aka “Senior” but senior is actually legally a junior. The voluntary petition for bankruptcy protection under Chapter 13 of the Bankruptcy Code does not contain a scribers error and says Jr. because Paul Teutul, Sr. is actually a Jr. This case as it has progressed turned into a sale case and creditors will receive 100% of their allowed claims. This means Mr. Paul Teutul Sr. is paying all his debts according to bankruptcy code and applicable non-bankruptcy law through the sale of his real property.

December 13, 2018 and Summary of Ongoing Issues

Here Comes Leonite Capital, LLC

A new development is Leonite Capital, LLC, storming onto the scene alleging an equity stake in Orange County Choppers. Uh oh, this could be trouble. It is kind of like plugging leaking holes, one with your left hand, another with your right hand, another with your right foot and then bam, Leonite comes in and you are standing on your left foot trying to plug the next leak. So Leonite provides it sued Orange County Choppers Holdings, Inc. for at least $500,000.00 plus interest in damages. Leonite alleges it was not given proper notice of Paul Teutul, Sr.’s bankruptcy proceeding and was not listed as a creditor. This is technically true given Leonite did business with OCC, a separate legal entity from the individual, Paul Teutul, Sr. Leonite alleges it has a senior secured promissory note on OCC with right to equity in OCC. Leonite is objecting to confirmation/approval of Paul Teutul Sr.’s amended chapter 13 plan as it may negatively effect their claim. Paul Teutul Jr. filed an opposition to the allowance of Leonite’s claim with many great arguments. The most compelling I think is that Leonite filed its objection to confirmation on May 14, 2018, but failed to file a proof of claim until five months later. Also, the claim of Leonite is unliquidated, contingent and disputed and unlisted. Paul Teutul, Jr. argues the disallowance or not allowing Leonite’s late filed claim does nothing since the claim cannot be discharged given it was unlisted or scheduled in the petition. We shall see what happens…..

The next hearing date for all continued matters is now December 20, 2018.

JTM Motor Sport, Inc.’s Alleged Secured Claim and Pending Mediation of Controversy
Paul Teutul’s chapter 13 bankruptcy is still progressing albeit with some issues not being resolved yet. The issues with JTM Motorsport, Inc’s alleged secured claim is still not resolved. As provided in more detail below JTM Motorsports, Inc. performed work in Mr. Teutul’s 2009 Corvette. The 2009 Corvette is being held hostage for payment for the work performed resulting in the alleged secured claim of JTM Motorsport’s Inc. The only thing that has changed is on October 30, 2018, a hearing was held on Mr. Teutul’s objection the JTM’s alleged secured claim and JTM requested mediation. Paul Teutul, Jr.’s attorneys objected to mediation, but the Court overruled their objection ordered mediation. On November 2, 2018, JTM Motorsports, Inc. filed a motion for an order of approval for this matter to be mediated. On November 12, 2018, Paul Teutul, Jr. filed a limited opposition to the motion for mediation and proposed order providing that despite Paul Teutul Jr.’s repeated requests to inspect the 2009 Corvette to evaluate the parts used and worked performed JTM has not made the 2009 Corvette available. Paul Teutul Jr. is just requesting as part of the mediation he be able actually inspect the 2009 Corvette. A very reasonable and essential request so why is JTM not making the 2009 Corvette available? I will let you speculate. Also, why did JTM want mediation at all when the bankruptcy judge could have ruled on Paul Teutul Jr.’s objection to their claim? Again I will let you speculate. On December 3, 2018, the Court entered the order approving the mediator and procedures for the mediation. We shall see what happens.

October 18, 2018 Update

There has not been a lot of movement in Mr. Paul Teutul Sr.’s chapter 13 bankruptcy case. All the issues listed below still remain. The objection to JTM Motor Sports, Inc. has a scheduling order but nothing else has happened. Any objections to approval or confirmation of Mr. Teutul Sr’s chapter 13 plan of reorganization have been continued to a new confirmation hearing date of October 30, 2018. Mr. Teutul Sr. still needs to find a buyer and sell his primary residence to fund the chapter 13 plan of reorganization. The October 30, 2018, hearing may provide some additional information as to how long Mr. Teutul Sr. will have to sell the house. Some jurisdictions will only allow 12 months to complete a sale to fund a chapter 13 plan of reorganization.

July 8, 2018 Update

Mr. Paul Teutul Sr.’s bankruptcy case is progressing for the most part normally at this point and the issues that remain involve the following:

1. Sale of Mr. Paul Teutul Sr.’s real property to fund the chapter 13 plan;
2. Objection to JTM Motorsport, Inc.’s alleged secured claim; and
3. The unknown value of filed Claim No. 9 given the claim is subject to ongoing litigation; more to come on this given the litigation is ongoing…… see below.

JTM Motor Sports, Inc.

As discussed and detailed below JTM Motor Sports, Inc. filed a motion for relief from stay and filed a claim for payment in Mr. Paul Teutul Sr.’s case alleging a secured claim and the claim was secured by Mr. Paul Teutul Sr.’s 2009 Chevrolet Corvette ZR1. Mr. Paul Teutul Sr. opposed the motion for relief from stay and objected to the claim of JTM. The hearing on the objection to JTM’s alleged secured claim is July 30, 2018.

In bankruptcy cases with assets for creditors to share, whether a Chapter 7, Chapter 13 or Chapter 11/12, creditors are required to file proof of claims with evidence detailing how much they are owed and why they are entitled to receive payment or a distribution of the bankruptcy filers assets. That is what JTM Motor Sports, Inc. did. They filed a claim alleging an estimated secured claim totaling $51,000, Claim No. 8, filed on May 7, 2018. The problems is there is no documentation attached to the claim evidencing the amount owed or basis for perfection of the alleged secured claim. See Federal Rule of Bankruptcy Procedure 3001 and specifically 3001(d) if you really want to do some reading. A secured claim filed with absolutely no documentation for the basis of the secured claim is troubling. This is exactly why Mr. Paul Teutul Sr. is objecting to JTM’s alleged secured claim and requesting the Court expunge the claim entirely. Mr. Paul Teutul Sr. is also alleging he owes no money to JTM at all. See below for more details in a prior update about why JTM is alleging it has a secured claim in this case and why Mr. Paul Teutul, Sr. argues he owes them no money at all.

A larger overreaching issue and even more troubling aspect of what is going on here is what FRBP 3001(f) provides: Evidentiary Effect. A proof of claim executed and filed in accordance with these rules shall constitute prima facie evidence of the validity and amount of the claim. Why should any bankruptcy filer and their counsel have to spend valuable time and money objecting to a claim that clearly has failed to meet the rules? If a filed proof of claim alleging a secured claim has no documentation attached, a barebones claim, how could the claim be given evidentiary effect and be prima facie evidence of validity of a claim? The barebones claim is of no evidentiary effect period……..

Filed Claims for Payment

So far the following claims filed in Mr. Paul Teutul Sr.’s Chapter 13 Bankruptcy:

Claim No. 1: Ally Bank; $15,283.50 secured by a 2011 Dodge Ram Pickup
Claim No. 2: Nationstar Mortgage LLC dba Mr. Cooper; $56,859.62 secured by real property
Claim No. 3: American Express c/o Becket and Lee LLP; $39,716.95 general unsecured claim
Claim No. 4: American Express c/o Becket and Lee LLP; $10,285.65 general unsecured claim
Claim No. 5: Midland Funding, LLC; $9,390.67 general unsecured claim
Claim No. 6: County of Orange c/o McCabe & Mark, LLP; $55,408.31 secured by real property
Claim No. 7: M&T Bank c/o Schiller Knapp Lefkowitz Hertzel LLP; $911,097.23 secured by real property
Claim No. 8: JTM Motorsports, Inc.; $51,000 secured claim allegedly secured by 2009 Corvette
Claim No. 9: Thomas Derbyshire c/o Bayard, P.A. Peter Ladig; NO AMOUNT LISTED GIVEN THIS CLAIM IS SUBJECT TO ONGOING LITIGATION ….. MORE TO COME REGARDING WHAT TAKES PLACE REGARDING THIS CLAIM
Claim No. 10: Cortland County; $8,363.59 secured by real property
Claim No. 11: New York Dept. of Taxation and Finance; $25,832.99 with $20,780.78 as priority claim and the remainder of $5,052.21 a general unsecured claim

June 13, 2018 Update

Things have generally died down in Mr. Paul Teutul, Sr.’s chapter 13 bankruptcy case. Mr. Teutul will sell his house, pay off all his debts and walk away with hopefully a boat load of money. Hopefully you are reading this and will know Mr. Paul Teutul, Jr. aka Paul Teutul, Sr. paid his debts in full.

The Current Drama

What is still going on is a fight picked by JTM Motor Sports, Inc. and Paul Teutul’s 2009 Chevrolet Corvette ZR1 in the possession of JTM Motor Sports, Inc. JTM is requesting the Bankruptcy Court give JTM the right to sell the Chevrolet Corvette ZR1 to satisfy JTM’s alleged garageman’s lien. Allegedly the deal was JTM would beef up the Corvette so Mr. Teutul Jr. could race it in an episode of “Street Outlaws” against “Farm Truck” and JTM would have their banners prominently displayed to get media attention. If you are not familiar with “Street Outlaws” Oklahoma City “Farm Truck” is a Chevrolet truck that has a camper shell and serious horsepower and set up to race, a sleeper truck or car. Both “Street Outlaws” and “American Chopper” are produced by Pilgrim Studios and are on the Discovery Channel. According to Paul Teutul the relationship with an associate of JTM, a Mr. Franco, that was helping to put the appearance together on “Street Outlaws” soured. To date Mr. Paul Teutul, Jr. has not appeared on “Street Outlaws” and raced “Farm Truck.” So now JTM is alleging they have a garageman’s lien in the vehicle for the parts and labor expended on the Corvette. They also asked for Mr. Teutul’s case to be dismissed which is ridiculous. From reading the declaration of Paul Teutul, Jr. and the attached emails it would seem JTM is going to have a tough time proving a garageman’s lien.

As of May 29, 2018

There have been many significant developments in Paul Teutul’s Sr. chapter 13 bankruptcy filing. There are a couple truly significant events that happened in May 2018. I was hoping American Chopper’s Paul Teutul, Sr. would save his home from foreclosure and work things out with M &T Bank, but his Third Amended Chapter 13 Plan no longer seeks loss mitigation to try and save his home. The Third Amended Chapter 13 Plan reduced the monthly plan payment to $750 a month for 60 months. That is a total pot of $45,000. The first chapter 13 plan filed proposed a pot of $146,928.60 to be paid at $2,448.81 for 60 months. This is a significant reduction.

Paul Teutul Sr.’s Third Amended Chapter 13 plan no longer requests loss mitigation regarding his home, but instead provides sell language as follows: “Debtor intends to sell Real Property having an address of 95 Judson Road, Montgomery, New York sold pursuant to 11 U.S.C. § 363(b). The Real Property is subject to a secured claim held by M&T Bank. Debtor has entered into an Exclusive Right to Sell Agreement with Ellis Sotheby’s International Realty to market the sale of Real Property. Once a Contract of Sale is entered into, the Debtor will amend this Plan accordingly. The net proceeds of the sale will be used to fund this Chapter 13 Plan and to pay all creditors in full. Debtor shall attach an affidavit containing all facts necessary for Court to approve the sale and should be prepared to address the requirements of 11 U.S.C. § 363 at the confirmation hearing. The Debtor shall submit an order approving sale upon confirmation of the Plan or the Court’s separate determination of the request, whichever is earlier.” This means the house we all saw on American Chopper is going to be sold and hopefully Paul Teutul, Sr. will walk away with some money from the sale after paying back property tax and M & T Bank missed mortgage payments. The Third Amended Chapter 13 Plan also provides all creditors will be paid in full. So those of you out there that are haters Paul Teutul Sr. is paying his creditors in full via the sale of his real property. This is not uncommon and what the Bankruptcy Code requires under Orange County Chopper Paul Teutul Sr.’s circumstances. It happens quite a bit actually, but all people seem to focus on is the person filed bankruptcy and do not take the time or educate themselves about what actually took place in the bankruptcy. I have no doubt Paul Teutul Sr. will continue to make good money and live a good life. He will also be 100% debt free upon completion of his Chapter 13 Plan.

Some History

If you do not know the huge building built as OCC’s headquarters was lost years ago and OCC leases a portion for the chopper business and restaurant OCC operates at the building. So you should have known then that things were not great. Unfortunately things did not improve for Paul Teutul, Sr. Not a whole lot has happened in the Chapter 13 bankruptcy filing. The original meeting of creditors was scheduled for March 28, 2018, was continued to April 11, 2018, at 12:30 p.m. Even in Chapter 13 cases few creditors show up to ask the debtor, Paul Teutul, Sr., questions. The meeting of creditors is a very limited forum and there is not a lot of time for creditors to ask questions after the trustee and/or their attorney asks their questions. If a creditor would like more time and request documents they may file an application for an order pursuant to FRBP 2004. I am sure there will be a couple creditors that show up because Paul Teutul, Sr. is the debtor and no other reason than that. I am a bankruptcy attorney and worked for a Chapter 13 Trustee. I would be the one questioning Paul Teutul, Sr. at this meeting of creditors. That was part of the job. Generally even under Paul Teutul, Sr.’s circumstances the meeting of creditors should not be too eventful.

Hearing Regarding Objection To Request For Loss Mitigation

A hearing that truly could be eventful and is the keystone for the entire Chapter 13 case is the hearing regarding Paul Teutul Sr.’s request for loss mitigation regarding his house pursuant to the terms of the Amended Chapter 13 Plan Paul Teutul, Sr. Please note for later Paul Teutul Sr.’s Chapter 13 petition starting this bankruptcy case was filed on February, 27, 2018. Paul Teutul, Sr. has checked the box for loss mitigation regarding his primary residence. Once creditors are served with the Chapter 13 Plan that may object to how the plan is treating them as a creditor.

On March 15, 2018, bankruptcy attorney Lisa Milas, on behalf of M&T Bank, the servicer of the loan and the owner Manufactures & Traders Trust Company, filed an objection to Paul Teutul’s Sr.’s request for loss mitigation. Loss mitigation is a fancy way of saying modification of the terms of the loan that can no longer be followed or have not been followed, deed in lieu of foreclosure with agreed upon terms or consensual sale. Paul Teutul, Sr. originally was loaned $1,500,000 from M&T Mortgage Corporation, another name used for the secured lender that I assume is Manufactures & Traders Trust Company since M&T Bank is the servicer, on September 27, 2005, secured by Paul Teutul Sr.’s primary residence. The mortgage was first modified October 10, 2013, and modified again on January 14, 2016. M&T Bank is objecting to Paul Teutul, Sr.’s request for loss mitigation given M&T Bank recently reviewed the loan and denied Paul Teutul, Sr.’s request for modification. There is a denial letter attached to the objection to Paul Teutul, Sr.’s request for loss mitigation as an exhibit and the rejection letter is dated December 18, 2017. This bankruptcy case was filed on February 27, 2018. M&T Bank’s objection says the loan was reviewed in January though. M&T Bank denied Paul Teutul, Sr.’s request for loss mitigation or modification given the monthly loan payment would increase significantly and the modification would not result in the requisite surplus income even if the interest rate was reduced and the term extended.

So yes, that is how most modifications work. The total owed with missed mortgage payments added in is spread out over an extended term with a reduced interest rate to make the monthly loan payment affordable again. Apparently after two prior modifications M&T Bank does not believe Paul Teutul, Sr. will be able to make the modified payment given his current income and expenses. M&T Bank is owed $905,448.00 and the property securing the debt is allegedly worth $1,800,000.00. So after applying the NYCPLR Section 5206 exemption of $137,950.00, Paul Teutul, Sr. has $756,602.00 without deduction the cost of sale or potential capital gains tax.

So unfortunately the Bankruptcy Court denied loss mitigation and the Third Amended Chapter 13 Plan seeks to sell Mr. Teutul Sr.’s real property to pay off all creditors in full.

Income and Debts

I am going to hold off on sharing any sharp bankruptcy attorney opinions other that what is provided in the filed schedules of Paul Teutul, Sr. Income of about $13,000 from Orange County Choppers, $5,500 from family support and about $2,600 from Social Security without deduction taxes and various other deductions before net income. One of the deductions that jumped out at me was the $1,034.45 a month for paying back retirement account loans. I am working on another article that discusses why to never take a loan from a retirement account. I hate to see retirement account loans and then a bankruptcy petition is filed anyway. Retirement account loans are the gateway drug to bankruptcy. Another monthly expense that jumped out at me was the monthly property tax of $4,166.00 and monthly insurance of $566.00. I am not familiar with property tax in New York but this seems extremely high. Paul Teutul, Sr. lists the value of the property as $1,800,000.00. One of the largest debts listed is for property taxes of $51,230.98. The Amended Chapter 13 Plan also provides that about $80,000.00 in mortgage payments were not paid prior to Paul Teutul, Sr. filing for bankruptcy. As it stands Pau Teutul, Sr. is seeking loss mitigation regarding the mortgage with M&T Bank and paying into the Chapter 13 Plan from monthly income $2,448.00 for 60 months for a total of $146,880.00 total pot. [Update: Since this was originally written Mr. Teutul, Sr. has significantly amended his schedules of assets to include value and many more assets.]

If I File Bankruptcy Will It Affect My Spouses Credit Score?

By Ryan C. Wood

As with many questions there is a short answer and a long answer.  The simplistic short answer is no.  If you file bankruptcy it will not affect your spouse’s credit score.  When you get married your credit profile is not linked to your spouses.  So, no, if you filed bankruptcy in the past it should not negatively affect your new spouse’s credit score.  Some believe that when you get married the credit profiles are linked and the credit score is averaged between the two spouses.  No, that is not correct.  As a bankruptcy attorney I get asked this sort of question over and over again.

The Long Answer Is Yes Your Spouses Credit Matters

The long answer is yes your spouse’s good or bad credit will affect your ability to obtain credit or loans in the future; generally.  Generally when a married couple applies for a loan for a home a joint application must be filed and this is when both credit profiles are looked at.  This is not an absolute though.  You are not required to apply for a home loan or vehicle loan as a married couple though.  I have no doubt a mortgage lender or broker would be happy to just use the spouse with the highest credit score to qualify for a home mortgage and charge an interest rate 1 – 3% over the market rate at that time.  If you do apply as a married couple most lenders will in fact average or take the lowest middle credit score for spouses applying for a home mortgage or other large credit purchase.

All Community Assets and Community Income Must Be Listed

If you are married you do not have to file bankruptcy jointly with a spouse.  Here in California as a community property state all community assets and all community income must be listed in the petition for bankruptcy protection filed for the filing spouse though.  The community is also getting a discharge of the community debts as well; See Section 524(a)(3) of the Bankruptcy Code.  This is getting very technical and we have other articles about this issue……  Just know that you can file for bankruptcy protection yourself to keep a bankruptcy filing off of your spouse’s credit report.  But also know that the long answer above still applies when seeking credit jointly; both credit reports are looked  reviewed.

The Bottom Line Is Take Steps To Rebuild Your Credit

One of the misconceptions us bankruptcy attorneys hear all the time is how bankruptcy will hurt or lower a credit score.  While having a bankruptcy on a credit report is certainly not positive there are all kinds of entries on a credit report that are not positive.  Also for the vast majority of people I meet with the damage to their credit score already took place given all of the missed payments piling up to that point long before seeking bankruptcy protection.  When I am sitting down speaking with someone their credit score is already pounded down by what took place already.  Most people would be better off credit score wise if they sought bankruptcy protection when they knew payments would be missed or when payments are missed.  At the same time I cannot fault anyone for trying to figure it out in the real world.  The reality is the filing of bankruptcy actually will improve most people’s credit score by stopping any additional negative history being reported and their debt to income ratio instantly changing to their benefit.  There will be no more debt listed on the credit report.  After that it is up to each individual to take the necessary steps to increase their credit score. 

Do Not Pay Any Companies For Credit Improvement Services

I cannot stand driving around and seeing signs stapled to telephone poles advertising how some company can fix your credit for a fee.  I also hear radio commercials about removing items from credit reports for a fee.  The Fair Credit Reporting Act governs the reporting of credit history and negative history can be on our credit reports for seven years.  If information reported to the credit bureaus is not accurate it should be removed and you do not have to pay anyone to do this.   

The Federal Trade Commission Website Is A Great Resource

The Federal Trade Commission provides a sample letter to dispute inaccurate credit entries and a step by step guide on how to dispute inaccurate credit report entries.  It is simple and easy to do.  We are all also entitled to a free credit report each year from annualcreditreport.com or call 1-877-322-8228.  You can get a report from each of the three major credit bureaus or just any single bureau.  The FTC website also has warnings regarding credit scams and other problems you can learn a lot from.  The Consumer Financial Protection Bureau also has this information and additional warnings about credit scams.  The CFPB was created after the mortgage meltdown to specifically help protect consumers from predator lending and other financial problems.

Not Having Accurate Credit History Is Costly

If your credit score is not a high as it should be because of negative history that is not accurate the amount you pay in interest on vehicle loans or home loans will be thousands and thousands of dollars more.  Over the life of a home mortgage of $500,000 at 3.5% interest will result in $308,280 in paid interest.  At an APR of 4.5% the interest totals $412,034; a difference of $103,758.  Realistically here in the Bay Area there are no homes for $500,000 anymore.  So let us have more fun with numbers.  A $900,000 mortgage [this is assuming you put down 20% at the time of purchase and you are purchasing an actual house at around $1.1 million or more] at an APR of 3.5% will have interest totaling $554,905.  At an APR of 4.5% the interest totals $741,660; a difference of $186,755.           

Social Security Administration Suspension of Social Security Number Scam


By Ryan C. Wood

As I have ranted about in the past there seems to be no end in sight to new scams.  Is it just another day with yet another scam attempting to steal identities and your hard earned money?  What adds injury to insult is sadly over the years I have filed a number of bankruptcy cases for people who were scammed out of thousands of dollars and left holding the bag.  Yes, bankruptcy was the quickest, easiest and cost effective way to permanently resolve the problems.  A new scam that I have now received three calls on my business phone lines is a recording alleging they are calling from the Social Security Administration and that “your” social security number is suspended for suspicious activity. 

Phone numbers they used:

1-800-820-9323

1-303-818-6263

512-519-5297

650-419-2195

1-800-234-9580

510-574-4462 – Spoke with Jeremy – He has no fears of being caught he said.

Please email me at: SSNscam@gmail.com with phone numbers you received social security administration scam calls from and I will add the phone numbers to this blog post.  Hopefully the list will help someone else to not fall for this scam.

When you receive this call the recording says to press  “1” for more information.  Of course I press “1.”  The first time I asked them, “How are you suspending a business’s social security number, because you know, you are calling a business phone number?  This was very confusing to the person with the ascent I was speaking to.  He then hung up on me.  I then filed a complaint with the Federal Trade Commission on-line.  The second time I just hung up on the recording given I was too busy to ask them questions.  The third time, which was yesterday, I merely asked, “What is your name?”  I immediately was told, “F_ _ _ Y_ _.”  If you want them to cuss at you and hang up on you this is a good question to ask because that is what happened.  Immediately asking them questions will get them to hang up.  Ask them where they are located.  Ask them their name.  Unfortunately I did not write down the phone numbers used for the first and second calls.  I did provide the phone number in my FTC complaint but did not keep a record of it separately.     

So this is a horrible scam.  First everyone is on edge about identity theft and their social security number.  Second they are most likely targeting the elderly people receiving social security income.  Not good.  There are so many elder abuse scams out there it is despicable.  Generally the way notice is provide by the government or similar agencies to a person about an problem or issues is by mail asking the person to call the government agency to discuss the issue.  There is usually some sort of deadline to act and failure to act has consequences.  A sort of scream or die type of notice procedure.  The Social Security Administration is not going to repeatedly call you or harass you about something.  They send you a letter, put the ball in your court, and if you do nothing it is on you.      

Federal Trade Commission Warning

The FTC on September 13, 2018, issued a warning about this scam. 

See:    https://www.consumer.ftc.gov/blog/2018/09/your-social-security-number-isnt-suspended-ever

The problem is few people receive these warnings in time to prevent someone from being scammed.  A good idea is to Google the phone number and see what you find before providing any information and calling the number back.  Hopefully you are reading this now and before it is too late.  Unfortunately we bankruptcy attorneys have filed bankruptcy cases to clean up identity fraud and debts incurred because of scams like this.  What non-bankruptcy lawyers do not understand is in the real world fixing problems can take a very long time and cost thousand and thousands of dollars with no guarantee of success in fixing the problem forever.  A bankruptcy discharge is an order from the federal court that is good forever (with a few exceptions but rare for a discharge to be revoked) discharging the legal obligation to pay a debt.  Filing bankruptcy is the law and is a vary cost effective way to get rid of financial problems resulting from scams.    

There is even an Internal Revenue Service imposter scam. 

See:   https://www.consumer.ftc.gov/media/video-0118-irs-imposter-scams

Filing Complaint With Federal Trade Commission or Consumer Financial Protection Bureau

If you receive a call like this please file a complaint with the Federal Trade Commission or Consumer Financial Protection Bureau.  To file a complaint please Google filing a consumer complaint with the Federal Trade Commission or similar search.  It is not difficult and will take about 5 minutes or less to complete.  You will receive an email confirmation that the complaint was received.  I have never received a response from the Federal Trade Commission or a follow up phone call.  That does not mean the FTC has not opened an investigation regarding the complaint.  Maybe the FTC will issue a warning like the two provided in this article because of the information you provide them and help countless people not fall for a scam.  You never know.  If you do nothing though the scammers will just keep calling people and trying to steal their identities and money without any fear of reprisal.  Not good.    

Why Credit Card Interest Rates Should Be Capped

By Ryan C. Wood

Credit card interest rates should be capped for the same reasons we have laws to make sure the food supply is safe and why we have seatbelts in our vehicles.  It is all about consumer protection.  It is just that simple and laws about our credit “products” are no different.  I recently noticed another bill was put before Congress to legislate at the federal level interest rate caps on creditor cards for consumers.  Maybe this time the law might actually get passed and signed.  I have written all kinds of articles about how we need credit and short-term loan reform in a number of areas. I am hopeful, but I doubt any real progress will be made in the near future to limit taking advantage of people that need short-term loans to pay for food or housing. Even as a bankruptcy attorney I have advocated for years to legislate protection regarding debts………

How Did We Get To 30 Percent Interest Rates To Begin With?

Each state has usury laws to protect consumers from unreasonable or unconscionable interest rates and contracts.  I have previously discussed “Why Are Credit Card Interest Rates So High” given there are state usury laws that are supposed protect consumers from unconscionable interest rates. Big business can easily find all kinds of ways to skirt existing legislation or change protections that protect individual consumers. I could list hundreds of examples and it is nothing new. It is unfortunate that over the years it has just become worse and worse to the tune of millions of dollars in disparity.  We just see higher and higher shameless interest rates.   

Payday Loans and Title Loans

In a prior article I wrote: “Why Payday Loans and Title Loans Need More Regulation and Not Less.”  I used the term loan shark not less than twelve times.  It is just the truth and why and how can this continue?  In this particular article I mention how there are laws to make sure there is no price gouging in the event of a natural disasters given people are vulnerable at that time………  These laws are protections resulting from a natural disaster. For some reason we do not want to protect consumers when they have a personal disaster whether in their control or not . . . . .

Why Payday Loans and Title Loans Need More Regulation and Not Less

The lending and credit practices in place right now are absolutely loan sharking and should be illegal period.  In the meantime let us discuss how things have run amuck. 

I have also questioned and complained about “How Can 1,000 Percent Interest Be Legal?” Well it should not be period.

Why Are Unconscionable Contract Laws Not Enforced

Arguably, or just my opinion, most payday loans, title loans and potentially credit card agreement terms are unconscionable contracts. In California we have Civil Code Section 1670.5 providing that if a part of a contract or contract is found to be unconscionable the court may refuse to enforce the provision of the contract or contract. Proving a contract is unconscionable is no easy task but generally the contract is overly harsh, unduly oppressive or unfairly one-sided. Unconscionable contracts are agreements that are unreasonably favorable to the credit card company or bank given they are clearly the more powerful party in the transaction.  Contracts or agreements that are overly harsh or unduly oppressive or are so one-sided as to shock the conscience should not be enforced.  Again, arguably 20-30% interest shocks the conscience.  Can we not agree that 1,000% interest is shocking? What is the limit?  In some industries there is no limit on mark-up of goods or services.  In our system the market is supposed to determine price of goods or services.  At the same time there are all kinds of examples of regulation that manipulate market conditions to the detriment of some parties and the benefit of others.  It is very difficult to agree on what is right or wrong, but can we all agree that we as consumers are supposed to have protections from parties we have no bargaining power with……….

Regulation For A Safe Food Supply

No one really complains about regulations that ensure our food supply is safe from production to sale.  We all actually take it for granted.  If we have more financial regulations to ensure the safe distribution of borrowed funds is it so different?  Nope.  They are just different industries and products.  We need better regulation to ensure safe borrowing for the benefit of consumers.  People are getting sick on bad meat (bad credit agreements) and it is not okay.

Capping Credit Card Interest Rates [AGAIN] Is A Great Start

I cannot say this about all laws that are changed, but generally how we treat many circumstances under the law have been developed over hundreds of years of trial and error. As a bankruptcy attorney there has been some form of debt relief by law, Bankruptcy Code, to obtain the discharge of personal liability of debts. We have modified the Bankruptcy Code over time but never entirely done away with it. Do you think debt and credit is something new? It is not. There is absolutely nothing new about one party as lender and another as the borrower. Why cannot we not learn from history so we are not doomed to repeat bad history? We more or less have done away with interest rate caps even though for hundreds of years under state usury law we capped interest rates to protect consumers. I ask you what has changed to warrant eliminating caps on interest rates? If there anything? Is there no more capitalism with a conscience possibly?

I see capping credit card interest rates like legislating that cars must have seatbelts or regulation to ensure safe food supply.  It is just that simple.    

Benefit Overpayments Are Dischargeable In Bankruptcy

By Ryan C. Wood

Time and time again I hear various government overpayments are not dischargeable when filing for bankruptcy protection. This is wrong. Government overpayments and overpayments are general unsecured debts that are eligible to be discharged when filing bankruptcy. I dedicated an entire section of a bankruptcy attorney website to hopefully dispel this myth over seven years ago. Overpayments from various government entities such as the California EDD (Employment Development Department), welfare overpayments, food stamp overpayments, social security overpayments and even retirement benefit overpayments are eligible to be discharged when filing for bankruptcy protection given they are general unsecured debts.

Do Not Forget About Recoupment Though

What is even more unknown is what equitable recoupment is. This article discusses the difference between a setoff and equitable recoupment. Equitable recoupment is not a violation of the automatic stay or order of discharge resulting from filing for bankruptcy and that is what is at issue in the case described and listed below.

Ninth Circuit Bankruptcy Appellate Panel No. CC-17-1375-LSF

The Ninth Circuit Bankruptcy Appellate Panel recently had an appeal that dealt with these issues as it pertained to a former city council member who also served on the planning commission for a city for around 17 years, a long time. Upon retirement she applied to supplement her retirement income by obtaining retirement income from the State of California via CalPers (she was apparently a State of California employee) and the also applied in her city for their Retirement Enhancement Plan benefits given her “:public service” as a member of the city council and planning commission. The 9th Circuit BAP memorandum of decision specifically added a footnote to the memorandum of decision to highlight that this person was on the city council at the time this Retirement Enhancement Plan was approved and that she voted in favor of the Retirement Enhancement Plan.

The Retirement Enhancement Plan is supposed to provide a small supplement to the California Public Employees’ Retirement System (CalPers) benefits for only certain eligible city employees. Public Agency Retirement System (PARS) is a private corporation that manages this Retirement Enhancement Plan. When there is an overpayment of some sort of benefit the question is always why was the person overpaid? In this case there seemingly are mistakes by all parties involved. The Retirement Enhancement Plan enrollee and bankruptcy filer in this case provided PARS with her income correctly as $14,938.04 annually or a year, which should have resulted in a monthly plan benefit of only $99.87 from the Retirement Enhancement Plan. Then PARS sent her an enrollment packet that mistakenly had the income listed as $14,938.04 per month, not annually, and resulted in a monthly benefit payment of $1,198.84 or a 1,100% increase……. The enrollee just signed the enrollment documents and returned them to PARS with the mistake. The overpayment of $1,098.97 continued for about 19 months before PARS realized the mistake and requested the $21,972.20 in overpayments be immediately returned.

Four months later in December 2014 the enrollee and overpayment receiver filed for bankruptcy protection under Chapter 13 of the Bankruptcy Code. Again, the PARS overpayment is a general unsecured debt that is eligible be discharged when filing for protection under the Bankruptcy Code. In Chapter 13 it becomes a little more complicated given a bankruptcy filer may have an obligation to pay all or part of their unsecured debt back and have the unpaid portion discharged upon completion of the Chapter 13 Plan. Almost three years after filing the Chapter 13 bankruptcy case the bankruptcy filer and overpayment receiver filed a motion for sanctions against PARS for violating the automatic stay in the chapter 13 case for withholding benefits to recoup the overpayment she received before the chapter 13 bankruptcy case was filed.

As I have told potential clients and clients for years that the underlying overpayment is eligible to be discharged, but the entity that the overpayment is owed the money has the right to recoup from any future benefits you made receive. This is what PARS is doing in this case. PARS reduced the bankruptcy filers/overpayment receivers’ current benefit to recoup the overpayment or funds the bankruptcy filer should not have received. The bankruptcy filer and her bankruptcy attorneys filed a motion for sanctions saying PARS is violating the automatic stay in the bankruptcy case by continuing to collect on a debt that is part of the bankruptcy filing and eligible to be discharged. This is called equitable recoupment.

PARS filed an opposition to the motion for sanctions providing the bankruptcy filer or overpayment receiver should have known she was receiving too much each month given she had approved the Retirement Enhancement Plan when she was on the city council and she knew the Retirement Enhancement Plan was intended only to provide a minimal supplement to CalPers retirement payments. She actually received $1,198.84 each month and that is a lot higher than the intent of the Retirement Enhancement Plan. Also PARS argued that she had signed the forms that included the calculation error and should have noticed the calculation error at that point too. If the cashier is supposed to give you a dollar in change and gives you $1,000 19 times in a row instead you will notice right? The bankruptcy court held PARS had the right to equitable recoupment and the bankruptcy filer and overpayment receiver appealed the order denying her motion for sanctions to the 9th Cir. BAP. So here we are now.

Equitable Recoupment

Equitable recoupment is not a violation of the automatic stay when filing for bankruptcy protection. Equitable recoupment is also not provided for in the Bankruptcy Code, but is a common law equitable doctrine, a fairness doctrine, that provides the setting up of a demand arising from the same transaction as a plaintiff’s claim or cause of action for the purposes of abatement or reduction. See Newbery Corp. v. Fireman’s Fund Ins. Co., 95 F.3d 1392, 1399 (9th Cir. 1996). Recoupment is not subject to or limited to claims that exist before a bankruptcy case is filed and can be recovered after the bankruptcy case is filed. This is what is going on in this case by PARS. PARS setup a demand for return of the overpayment for the purpose of abatement or reduction of the bankruptcy filer’s current and future benefits under the Retirement Enhancement Plan. If the bankruptcy filer was no longer receiving benefits under the Retirement Enhancement Plan from PARS, then there is no way for the abatement or reduction to take place on current and future received benefits.

Here comes the more complicated part and a detailed analysis of if a party has the right to recoupment. There is a two part test used by the Ninth Circuit….. the events need to be part of the same transaction and must be sufficiently interconnected so that it would be unjust to insist that one party fulfills its obligation without requiring the same of the other party. The Ninth Circuit uses a logical relationship test regarding if the events are part of the same transaction. See Aetna U.S. Healthcare, Inc. v. Madigan (In re Madigan), 270 B.R. 749, 753 (9th Cir. BAP 2001). Transaction is defined liberally and in a flexible construction or broadly.
The original Bankruptcy Court found that the logical relationship test was satisfied given the debt owed to PARS and future benefits owed to the bankruptcy filer/overpayment receiver were from the same facts. The Ninth Circuit Bankruptcy Appellate Panel did not have too much to add to the analysis and agreed that the overpayment owed to PARS and the current benefits received by the bankruptcy filer/overpayment receiver are from the identical transaction and retirement plan.

The bankruptcy filer/overpayment receiver in the appeal attempts to argue that equitable recoupment is not part of the Bankruptcy Code, if Congress intended for equitable recoupment to be an exception to the automatic stay Congress would have included it in Section 362(b) of the Bankruptcy Code and California law prohibits the offset of retirement benefits. The Ninth Circuit Bankruptcy Appellate Panel explained that it is bound by Ninth Circuit precedent unless overturned by the Supreme Court and equitable recoupment is a doctrine in the Ninth Circuit. The Ninth Circuit Bankruptcy Appellate Panel further noted that the bankruptcy filer/overpayment receiver did not make these arguments in her opening brief so the panel does not have to consider them regardless. Ouch. Regarding California law prohibiting the recoupment of retirement benefits the appellate court equally slams the door and provides multiples cases in which California courts treat pension benefits the same as wages for purposes of recoupment. See Krolikowski v. San Diego City Emps.’ Ret. Sys., 24 Cal. App. 5th 537, 557 (2018) (holding that recoupment of state pension benefit overpayment was not barred by statutes of limitations; exemptions for levy and attachment of public retirement benefits; equitable estoppel; or laches).

What Happens Most of The Time Regarding Overpayments When Filing Bankruptcy

What happens with overpayments most of the time when filing bankruptcy is after receiving a discharge that is the end. Someone receives an overpayment for whatever reason and they do not need future benefits from the program or entity they received the overpayment from. There is no way for the discharged overpayment to be collected on given there are no current or future benefits paid out that can be reduced for recoupment purposes.

Do Not Mistake Setoff With Equitable Recoupment

Unlike equitable recoupment setoff is codified in Section 553 of the Bankruptcy Code. Setoff allows a creditor to deduct amounts owed to it by the bankruptcy filer from amounts the creditor owes to the person or entity filing for bankruptcy protection. A creditor must request and receive relief from the automatic stay before doing any sort of setoff. Also a distinguishing difference is setoff does not allow claims from before the bankruptcy case was filed to be setoff with claims after the bankruptcy case was filed.

How Can Credit Card Interest Rates Be So High?

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The short answers is because the law has been interpreted to allow credit card interest rates to be criminally high.  It was not always like this though.  You may be thinking to yourself that each state has usury laws limiting interest rates.  You are correct but keep reading to find out why it does not matter.    

There are price gouging laws in time of emergencies to not allow improper increases in price to make money at the expense of human suffering. There are state usury laws limiting how much interest can be charged when lending money.  So why are credit card interest rates so high?  If someone is in financial turmoil, financial disaster why are there not laws limiting interest rates on what they can borrow just like you cannot price gouge during natural disasters? How can a bank charge 29% interest on a revolving unsecured credit account? It is like loan sharking right?  Loan sharking is illegal right?  My best analogy is seatbelt laws. Seatbelt laws save lives. This is a fact and without seatbelt laws requiring wearing seatbelts not as many people would wear seatbelts and vehicle deaths would be higher. Well, The Supreme Court of the United States more or less opened the door to the repeal of seatbelt laws regarding limits on interest rates and people have been getting killed with credit card interest rates ever since. We all need to be saved from ourselves sometimes and our laws protect us. So what happened?

State Usury Laws

First let us talk about state usury laws. Each state can have usury laws limiting how much interest can be charged under different types of financial transactions. Over time many exceptions and loopholes have been created to allow lenders in different forms of loans to charge ridiculously high interest rates. See our other bankruptcy attorney articles about 1,000% interest title loans and payday loans. Somehow these horrible loans are legal though . . . . Below are the various sections of law in California that make up California usury laws. Generally, and very generally, 10% is the highest interest rate under California usury laws depending upon the type of financial transaction.

California Const. Art. XV §1
California Civil Code §§1912-1916.12
California Civil Code §§1916-1 to 1916-3
California Civil Code §§1917-1917.006
California Civil Code §§1917.060-1917.069
California Civil Code §§1917.160-1917.168
California Civil Code §§1917.610-1917.619
California Commercial Code §§9201-9208
California Corporations Code §§25116-25118
California Financial Code §§22000-22064
California Government Code §§5900-5909

Why Are Credit Card Interest Rates So High?

If there is state usury laws limiting the amount of interest that can be charged how can banks charge 29% interest on a credit card debt? The case is Marquette National Bank v. First of Omaha Corporation, 439 U.S. 299 (1978). Somewhere there is a bankruptcy attorney, not this one, cheering for these high interest rates given unmanageable debts drive bankruptcy filings. “The First National Bank of Omaha (Omaha Bank) is a national banking association chartered in Nebraska; it is enrolled in the BankAmericard plan, and solicits for that plan in Minnesota. Omaha Bank charges its Minnesota cardholders interest on their unpaid balances at a rate permitted by Nebraska law, but in excess of that permitted by Minnesota law.” So there you go. First National Bank of Omaha solicited clients in the state of Minnesota but chose not follow Minnesota state law regarding interest rates. First National Bank of Omaha charged higher interest rates according to the law in which they were located, the state of Nebraska. What should be controlling was the issue? Generally speaking the law of the jurisdiction where the individual is located, a state or country, governs their legal rights and not the corporate headquarters or location of the business they are doing business with. Each state has usury laws to protect their state residents within that state and limit interest rates. Each state in the United States has many different laws than other states. Family law is a great example and the 8.5 community property states vs. equitable distribution in the remaining 41.5 states. Why is there a 0.5? Alaska is an opt-in community property state. Save that one for Jeopardy. Back to . First National Bank of Omaha and how they arguably disrespected the state law of Minnesota. SCOTUS provided: “Though the “exportation” of interest rates, such as occurred here, may impair the ability of States to maintain effective usury laws, such impairment has always been implicit in the National Bank Act, and any correction of that situation would have to be achieved legislatively. Pp. 439 U. S. 318-319.” So under the federal National Bank Act what The First National Bank of Omaha did was okay even though it violated the usury laws of Minnesota. There you have it and the rest is history.

But wait. What state allows interest rates of 29%? This is where capitalism and greed took over and now we have more deaths by higher interest rates than before 1978. Certain states repealed or changed their usury laws to allow for high unconscionable interest rates. These states did this to lure the big banks to set up shop in their states to create jobs in these states. Well it worked. So for a few thousand jobs millions of Americans can be charged massive interest rates that we can all agree of too high.

What is the legislative solution SCOTUS mentions in The First National Bank of Omaha? Our United States legislatures, the Senate and House of Representatives, would have to pass legislation to limit interest rates and then that would applicable nationally. Do not hold your breath given our federal legislatures chose to bailout these same banks from the mortgage meltdown. Too big to fail means too big to be honestly regulated.

Should I Rent To Someone Who Has Filed Bankruptcy?

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YES, YES and YES.  The reality is an apartment building owner or manager should rent to those who have filed for bankruptcy protection because it is in their best financial interest.  Let me tell you why it makes financial sense given just not discriminating against other humans on THIS basis may not be enough motivation. You are in the business of renting rentals and getting paid each month so why not rent to whomever is most likely to do that. Will a mindless, soulless and heartless corporation rent to someone that filed for bankruptcy protection? I have found there are more problems with large corporate ran apartment complexes given the humans that work there are “just doing their job.” Which means they “just follow” the corporations rules and procedures to ensure they remain employed regardless of what reality actually is or harm caused.  And yes, still do your due diligence and request pay statements to make sure they can afford the rent though with first, last month’s rent and security deposit.

Link to YouTube video below:

Why You Should Rent to Bankruptcy Filers

What Is The Reality?

The reality is an apartment building owner or manager should rent to those who have filed for bankruptcy protection because it is in their best financial interest. For one, the potential renter has no debt (or very little). Two, the renter with a bankruptcy wants to rebuild their credit. Three, they are not eligible to obtain a discharge for many years depending upon the chapter of bankruptcy they filed and when. Four, it is not legal to discriminate against bankruptcy filers . . . . this is a stretch though in reality. If you are an owner or manager of an apartment building and want to decrease your accounts receivable and delinquent rent payments please rent to those who have no debts . . . make sense right? Of course as a bankruptcy attorney I am biased right? Or is this drum I keep beating just true and make sense? If someone is just following the law they should not be looked upon as bad or discriminated against right? We can all agree that all types of discrimination are bad right?

One: Bankruptcy Filers Have No Debts

Okay, so this is a little more complicated but is true in some circumstances.  If the bankruptcy filer has a vehicle loan, student loans or owed not dischargeable taxes they may still have some debts after a discharge in bankruptcy. In a Chapter 7 bankruptcy they will not have any general unsecured debts like credit cards though after discharge. For examples:
1. Prospective Renter 1: $70,000 gross income with $40,000 in credit card debt and no bankruptcy on credit report.
2. Prospective Renter 2: $70,000 gross income no creditor debt and a bankruptcy on credit report.

Oh by the way, they both work for the same company and have the same experience etcetera. This is a simplistic example but exactly what I am trying to point out. Which prospective renter is a higher risk of not paying the rent or legally forcing you to hold to bag if rent payments are missed?

So are you going to go with the person that is struggling to pay credit card debts that have high interest rates that were once illegal and they are getting squeezed harder and harder each month to pay basic living expenses? Or rent to the person that followed the law and discharged debts to make sure they can pay their rent each month and eat?

Or are you going to illegally discriminate against my clients for following the law and obtaining a discharge according to the law written by your elected Congress and signed into law by your elected President of the United States of America? I hope you choose to not discriminate.

Two: My Clients Want To Rebuild Their Credit

No one wants to file bankruptcy and I can assure you after receiving a discharge my clients want to rebuild their credit. As a bankruptcy attorney I feel I have an obligation to provide education too. We have a number of Consumer Financial Protection Bureau free pamphlets (yes they are free; all you have to do is request them; another reason to choose our services) on a table in the front of our office include: Know Your Rights When A Debt Collector Calls; How To Spot Frauds and Scams; How To Find The Best Credit Card; and How To Rebuild Your Credit. My clients have been put through hell already with missed payments, harassing phone calls and the stress of paying the bills each month. They do not want go through it again and they want to rebuild their credit. As an apartment owner or manager you can encourage my past client to enroll in a bill paying service that reports to all three credit bureaus so that paying rent also helps rebuild credit. How about no discrimination but incentification of on-time regular rent payments that is mutually beneficial? You do want on-time regular payments of rent each and every month right? You should consider it.

Three: We Can Only Get A Chapter 7 Discharge After 8 Years From Last Chapter 7 Case Filed

Once someone files for chapter 7 bankruptcy and discharges all of their eligible unsecured debt they cannot obtain a chapter 7 discharge again for eight years. So what happens if they do not pay their rent? Well, the apartment manager/owner has every legal option available to enforce the debt. You do not have to worry about the renter filing for bankruptcy protection the day before you are supposed to evict them or discharge the unpaid rent. So why not rent to someone with a bankruptcy on their credit report?

Four: It Is Against The Law To Discriminate Against A Bankruptcy Filer

Section 525 of the Bankruptcy Code provides some specific protections. You cannot be terminated or discriminated against by a private employer. You also cannot be denied student loans. This is a very simplistic explanation of Section 525, but it exists. What about not renting to someone because there is a bankruptcy on their credit report? This kind of discrimination falls under an apartment owner/manager not renting to someone with three noisy kids or two dogs. You cannot not rent to someone because of their kids, but some other “pretext” or excuse, if any, will be given for the discrimination other than the actual horrible discriminating reason.

So rent to someone with a bankruptcy on their credit report and give them a chance just like some other human I am sure gave you a chance at some point in your life. Pay it forward. I really have no realistic hope that mindless, heartless soulless corporations will change any of their policies in this area………