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Dec 2014

Loan Mod–Even At the Last Minute, Bankruptcy Worked

Posted by / in Virginia Bankruptcy, Weekly Posts / No comments yet

This time bankruptcy worked better than I hoped

John and Val filed a Chapter 7 bankruptcy with me in 2004.  A lot of their problem then was medical bills.

John’s health continued to decline.   When they came to see me in 2012, he was disabled.  He was confined to a wheel chair.  And they were back in debt.  No surprise.

But John wanted to “protect his credit” so they decided to do nothing.


After their 2004 bankruptcy, John’s health kept getting worse. No surprise they were in financial trouble again.

They came rushing back this month, December 2014.  They had gotten a trial loan mod–getting them a house payment they could afford

But, they hadn’t been able to make the loan mod trial payments!  Two reasons.  First, they had been taking pay day loans–and a car title loan!  And now were paying those instead of the mortgage!  (Why; well payday loans will call and threaten you, if you don’t pay them.) Second, Val had gotten garnished for back Home Owner Association dues.

So, they were back to the mortgage they couldn’t afford.  They now had a car payment they couldn’t pay.  And Vicky would have a new paycheck garnishment starting in two weeks.

This was a case for Chapter 13

I always look first at Chapter 7, but this was a case for Chapter 13.  I could use Chapter 13 to take the interest on the title loan from 240% down to 5%.  Saving nearly $325 a month. With John on social security disability, that $325 was lot of money.

Second, I thought there was a chance that the bankruptcy judge could undue their “default” on the trial mod payments.  (Force the mortgage company to accept the loan mod trial payments late, and then lock in the modification.)

The husband threatened to leave my office unless I could promise him this would work.  No promise: loan mods are voluntary.  I’ve never tried to force a bank to accept one.  His wife told him, what choice do we have?

Loan Mod Offer Comes in the Mail

Worked better than I hoped.  In less than two weeks, the mortgage company offered them the loan mod again.  Make three trial payments, and we’ll make it permanent. (I didn’t have to try to argue the judge had the power to bring back the defaulted mod.)

Now that Val is not being garnished, and they are not being bled by payday loans, they can make that payment. (And I didn’t have to try my long-shot argument in front of the judge..)

House saved; family saved.

Wew.  No guarantee this would work again.

Even at the last minute, for most people bankruptcy works

These folks would have saved enormous stress–and probably helped John’s health–if they had gone ahead with bankruptcy in 2012.  (They chose “protecting their credit”  instead of protecting their family.) But even at the last minute, for most people, bankruptcy works.





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Nov 2014

VA Bankruptcy Trustee Tries to Grab Support Payments

Posted by / in Virginia Bankruptcy, Virginia Chapter 7 Bankruptcy / 1 comment

Chapter 7 Bankruptcy Trustee Grabbing Alimony Payments

Esther is divorced, mother of two grade school children.  She and the kids are living on child support, alimony, and pulling money out of her retirement.  She has $10,000 left in her retirement.   Her most valuable possession is her paid for 2007 Honda Odyssey.  It has 148,000 miles.

Esther hasn’t worked in several years.  She had been a stay-at-home mom for most of the marriage. (Her retirement is from Sentara, so I’m guessing at one point she worked as a nurse.)

Esther filed Chapter 7 bankruptcy this spring in Norfolk, VA.  Her papers showed she had several unpaid medical bills.  Her largest credit card, less than $4000, was with Capital One.

The Chapter 7 trustee told the bankruptcy judge that he wanted her alimony.  Without the alimony, it’s hard to know how this family will make it.  The child support, without the alimony, is less than the rent.  The children will suffer.

The bankruptcy lawyers in Virginia, led by Darden Hutson and Daniel Press, are looking for members of the Virginia General Assembly to help moms like Esther.   We need a sponsor for a bill to clarify that spousal support cannot be taken away by the bankruptcy court.

Once we get a sponsor, the key man is Del. David Ablo (R-Springfield).

Dave Albo

Delegate Dave Albo, with his wife, Rita, and adopted son, Ben.   Del Albo is Chairman of the Courts of Justice Committee in the Virginia House of Delegates.   He will have more say than any other one person, on whether  the legislature will help women and children, by telling the bankruptcy court to keep their hands off alimony and spousal support.

Del. Albo is Chairman of the Courts of Justice Committee, in the Virginia House of Delegates.

His committee controls whether bills on bankruptcy exemptions go to a vote in the full House of Delegates.

Early in his career, Del. Ablo demonstrated his heart for children.  He served as a court-appointed guardian for neglected and abused children.

We hope that Dave Albo will show his heart for children this year by supporting our bill.


Update:  thank you Del Dave Albo!

Under Del Albo’s leadership, his committee approved this important law in an unanimous vote, January 28, 2015!



Update 2:  Passed and signed into law March 2015.

Gov. Terry McAuliffe signed into law this morning HB 2015, that fixed this problem, and protected single moms and their families.

Only one member of the 140 member Virginia General Assembly voted no.  Still, it could have gotten hung up at any point.  Three legislators deserve special thanks for their work.

Thanks go to Del Scott Surovell, who was our sponsor.

Del Dave Ablo, Chairman of the House Courts of Justice Committee.  He was the key guy.  He puts people above politics.

Sen. Mark Obenshain, Chairman of the Senate Courts of Justice Committee.

Thank you all.


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Nov 2014

Ocwen Back-Dates Loan Mod Letters

Posted by / in Virginia Bankruptcy / No comments yet

Ocwen Back-Dates Loan Mod letters–according to NY Attorney General.

Here's a PR photo of Ocwen President Ron Faris offering a loan mod to struggling home owners. The New York Attorney General charges that Ocwen back dates some mod paperwork, so consumers miss their deadlines.

Here’s a PR photo of Ocwen President Ron Faris offering a loan mod to struggling home owners. The New York Attorney General charges that Ocwen back dates some mod paperwork, so consumers miss their deadlines.

One of the scary thing about applying for loan mods is the short deadlines you have to get them stuff–often things you’ve sent them twice before.

As a bankrutpcy lawyer, I’m often sent copies of those requests to send on to my clients–and sometimes the dates seemed a little odd.

I was still shocked when the Attorney General of New York says Ocwen is back-dating some of those letter:  maybe intentionally.

In spite of all the dishonesty that went into the housing crisis, I still tend to thing banks are usually run by honest people. I’m going to start looking at the dates on those letters I get more closely–and I hope they get what they deserve.

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