In an interview on WBZ-1030AM Radio in October, I was asked if I thought the changes in the bankruptcy laws were “fair.” My response: “ask me in a year.” Well, the Bankruptcy Abuse Prevention and Consumer Protection Act is here. As Gene Wilder gleefully shrieked in Young Frankenstein, “IT’S ALIVE!” One of the most important new requirements under the law is the need for get a “ticket” to the bankruptcy court. It’s not worth shrieking about, but it is worth making sure that consumers contemplating filing bankruptcy know about it.
Archive for 2005
Find out what you need treatment of male sexual problems online viagra generico aimed at improving ED.
It is bad enough that the new bankruptcy laws are making bankruptcy more arduous and expensive for debtors, but now Congress is set to stick it to debtors once again…by increasing filing fees.
As of October 17, BAPCPA’s increased filing fees for Chapter 7 cases went from $209 up to $274. Chapter 13 cases – which involve payment plans – actually went down from $194 to $189.
Now, a provision in the Deficit Reduction Act of 2005 increases filing fees for Chapter 7 cases another $25 to $299 and fees for Chapter 13 cases another $85 to $274. The biggest increase: Chapter 11 filing fees will jump from $1,039 to $2,789. Both the House and the Senate passed the bill but a procedural move in the Senate has sent the bill back to the House for another vote. The House is scheduled to vote on the bill when after it returns on January 31.
The effective date of the bill is 60 days after the President signs it. Mark your calendars accordingly.
This morning, while I was waiting for my case to be called, the US Bankruptcy Court in Boston issued a preliminary injunction against Bryon Martinez d/b/a Homestead Financial Corporation of Lynn, Massachusetts. The case is an Adversary Proceeding – a lawsuit filed in the bankruptcy court (Morse v. Martinez, Docket no. 05-1471) . The injunction prohibits him and his company from “preparing any bankruptcy documents for any person in any United States Bankruptcy Court in the District of Massachusetts …and from soliciting payment or receiving payment for providing any bankruptcy services or preparing any bankruptcy documents for any person in any [Massachusetts Bankruptcy Court].” The preliminary injunction is in effect until a full trial takes place.
According to the Complaint filed by the US Trustee, Martinez is a bankruptcy petition preparer (although not an attorney) who found his “clients” by combing through public records searching for folks who were facing foreclosure. He filed bankruptcy petitions on behalf of bankruptcy debtors, but did not disclose his status as a bankruptcy petition preparer (which is required by the US Bankruptcy Code). He would then tell his clients he would attempt to obtain refinancing of their homes, once the bankruptcy petition was filed.
In a November 17, 2005 decision, the US Bankruptcy Court in Boston found that Boston University violated the automatic stay of the Bankruptcy Code when it refused to permit a bankruptcy debtor to register for classes because the debtor owed money to BU.
The case involved a debtor who enrolled at BU in the autumn of 1999. While she received substantial financial aid during her first three years, she did not receive any aid for her senior year which was spent entirety in the African country of Niger. The costs of tuition and her air fare to Niger were paid for by BU. During that fall semester, BU sent three notices to debtor and her family but was nevertheless allowed to return to Niger in the spring because the tuition and costs had already been paid in full.
Upon her return, the debtor had one class to complete but as this class was offered only during the spring semester, she applied for and was permitted a leave of absence for the fall 2003 semester. When she attempted to register for the spring 2004 class, she was told she had to pay $38,195 then owing for her tuition and costs for the 2002-2003 academic year. Unable to come up with such a large amount of money, she applied for another leave of absence to the spring of 2005 when the course would be taught again. In the meantime, she tried to resolve the tuition issue with BU but was unsuccessful. On December 14, 2004, she filed bankruptcy under Chapter 7, listing the obligation to BU as an unsecured claim.
After filing the bankruptcy petition, she attempted to register again for her final course. BU refused. Even though she was refused, she made arrangements with the professor to attend classes, and complete tests and assignments during that Spring 2005 semester, with the hope of being allowed to register once she received her bankruptcy discharge. The discharge was received on March 28, 2005.
On March 30, 2005, the debtor filed a complaint seeking (1) a determination of whether the debt to BU was in fact dischargeable; (2) an injunction barring BU from taking any action to enforce the debt; and (3) damages, attorney’s fees and punitive damages for violating the Automatic Stay.
When law firms send out collection or “dunning” letters to consumers, they are required by the Fair Debt Collection Practices Act to identify the name of the creditor to whom the debt is really owed. 15 U.S.C. Section 1692g(a)(2). The US District Court in the Eastern District of New York found that Zwicker & Associates did not comply with this important provision. Sparkman v. Zwicker & Associates, PC, 374 F.Supp.2d 293 (2005)
Ms. Sparkman was in debt. Apparently, Ms. Sparkman had a major credit card with Chase that went into default. Chase managed to sell the delinquent account to an entity called The Bureaus, Inc. a company that buys debt. She filed for bankruptcy protection in August 2004. Prior to filing, she received a collection letter from Zwicker & Associates in October 2003.
The letter was two pages, printed on Zwicker’s letterhead and signed by one of Zwicker’s attorneys. The subject line of the letter read: “RE: The Bureaus, Inc. Original Credior: CHASE.” However, the body of the letter read “This office has been retained by The Bureaus, Inc., an agent of the current owner of your account, to assist it in the collection of the funds you owe….”.
When the courts are called upon to determine whether there has been a violation of the FDCPA, the courts apply the standard of the “least sophisticated consumer.” 15 U.S.C. Section 1692g(a). The District Court found that the use of this language “suggests that the creditor is someone other than The Bureaus.” In finding against Zwicker & Associates, ‘[t]he least sophisticated consumer would not deduce from reading the [October 2003 letter] that the name of the creditor seeking collection is The Bureaus.” Because the court found this to be a violation of Section 1692g(a)(2), the court awarded judgment and damages to Ms. Sparkman.
One of the fundamental purposes of enacting the Fair Debt Collection Practices Act was to promote fair and ethical debt collection practices. “The Act was the result of compromises that resulted in its bipartisan support and support by both the major debt collection trade associations involved and consumer organizations.” National Consumer Law Center, Fair Debt Collection (4th Ed. 2000). Obeying the rules is not rocket science, especially the rather simple one of identifying the creditor in a communication to the debtor, which is why Zwicker & Associates was on the losing side of Sparkman’s case.
You get yourself a new credit card and think, ‘hey, my kid is going off to school….I’ll give him one too.’ Or perhaps ‘I’ll give one to my elderly mother, just in case of an emergency.’ Then you encounter some financial problems, and end up defaulting on the credit card agreement. You may even contemplate bankruptcy. But you’re confident that your mom and your son won’t get stuck with the credit card bill. After all, you signed it. You applied for it. You made the decision to give it to them. Indeed, you even paid the bill….when you could. They are not going to try and collect it from them.
Washington passes legislation to make bankruptcy options tougher for Americans. Senators and House Members demand that consumers be held responsible for their spending. Now Wall Street is apparently expressing concern that the economy will suffer because consumer spending is slipping.
As the Palm Springs Desert Sun reported on November 5, Wall Street’s concerns are ultimately rooted in the rather uncomfortable fact that 70% of the US gross domestic product relies on consumer spending. So if fuel bills are going up, grocery prices are going up, credit card minimum monthly payments are going up and salaries are…well…not, what’s a consumer to do?
If you remembered my October 17 entry, I mentioned the price in gold and how I expected it to rise. Quiet whispers using the “I” word (“inflation”…shhhh!) will also mention that precious metal that tends to fare better when the dollar value goes down.
With that in mind, one might expect to hear stock tips on gold mining companies, or gold and other precious metal ETFs. One might want to check out sites that discuss gold investing, such as www.kitco.com or www.financialsense.com. However, with a bit of shock and awe (and not a good “awe” I might add), I learned that in this peculiar economy where credit card defaults are at an all-time high, the stocks investors are taking a second look at are those of (gulp) debt collection companies.