Supreme Court To Hear Challenge To 2005 Bankruptcy Law
June 23, 2009
Changes to bankruptcy law passed in 2005 have made it more difficult and more expensive to file bankruptcy. Passed in an effort to prevent abuse of the bankruptcy system, the law restricts the advice that attorneys can give to their clients about incuring more debt before they file bankruptcy.
The U.S. Supreme Court has agreed to hear a challenge to the law that argues it violates the First Amendment.
Robert J. Milavetz, a 73-year-old Minnesota lawyer, says that the provisions of the law that forbid an attorney from advising a client to incur new debt before filing bankruptcy effectively prevents attorneys from recommending that a client buy a car so that they can get to and from work or refinance a home to pay down credit card debt.
Many constitutional experts agree that the part of the law restricting the type of advice an attorney can give a client is probably in violation of the constitution. Since it is unehtical for an attorney to advise a client to break the law, they shouldn’t be telling clients to abuse the bankruptcy system in the first place.
It will be interesting to see what action the court takes on the matter.
Wardrobe Malfunction May Still Cost CBS
May 4, 2009
Janet Jackson’s infamous wardrobe malfunction while performing with Justin Timberlake at the 2004 Super Bowl may still result in CBS paying a stiff penalty.
The United States Supreme Court ordered the 3rd U.S. Circuit Court of Appeals to consider reinstating a $550,000 fine imposed by the FCC after the high court upheld the commission’s policy on fleeting expletives.
“Cram-Down” Power For Bankruptcy Judges Likely To Die In Senate
April 30, 2009
A Wall Street Journal story by Elizabeth Williamson said that President Barack Obama’s plan to give bankruptcy judges the power to modify mortgages is headed for a defeat in the U.S. Senate.
The measure, once an amendment offered by Senator Dick Durbin of Illinois as part of a sweeping housing bill to be considered today, is expected to be voted on separately and will lack the 60 votes to necessary to pass a procedural vote, according to Williamson’s article.
Seen by the President and many Democrats as an important releif for homeowners, bankruptcy protection will still provide judges with the power to modify the terms on other debt.
Chapter 13 bankruptcy protections will still offer homeowners with a way to stop foreclosure, but will require more intense negotiations to modify the terms of the mortgage.
**Updated. The measure faile in the Senate with only 45 votes for and 51 against.
With Big Bankruptcies On Horizon, Huge One Still Making News
April 29, 2009
What is left of the defunct accounty firm Arthur Andersen L.L.P. has agreed to pay Enron Corp. creditors $16 million to settle a claim that the firm was negligent in its advising and auditing of the energy firm, whose bankruptcy was once described as the largest corporate bankruptcy in U.S. history and still ranks fourth overall.
The settlement, which includes a continued denial of negligence, must be approved by the New York bankruptcy judge overseeing the Arthur Andersen bankruptcy. Four former partners of the accounting firm are handling all the pending litigation against the defunct company.
Thinking of the huge bankruptcy of Enron, due to fraud and accounting irregularities, makes me wonder how a bankruptcy at Chrysler or GM will look.
Chrysler is still negotiating with its creditors to stave off a bankruptcy filing that could happen as soon as tomorrow.
***The AP is reporting that negotiations with Chrysler’s creditors have broken off and that the company will file Chapter 11 bankrupcty today (April, 30).
Officials at GM have said that if agreements cannot be reached with its bond holders, that it may have to file bankruptcy at the end of May.
“Tea Party” Protests Take Aim At Obama’s Stimulus
April 13, 2009
Conservatives across the country will use Wednesday, April 15, to protest the unprecedented spending increases that have been used by both George W. Bush and President Barack Obama .
Activists are using the protest to highligh the governments growing debt levels that will be used to bailout banks and push some of the President’s domestic initiatives, such as healthcare reform.
“It doesn’t take a Ph.D. in economics to know we’ve been living beyond our means,” said U.S. Rep. Ron Paul, R-Surfside TX, who plans to attend a rally in Seabrook. “Most people are looking around and thinking who are they going to blame the most. I think there’s plenty of blame to go around.”
Concern about the increases in government spending are not limited to Republicans. An article in the Fort Worth Star-Telegram quotes the Tarrant County Democratic Party Chairman Steve Maxwell.
“I think it concerns the most liberal Democrat,” Maxwell said. “Our position is there is a good reason. We are in an extraordinary situation that requires extraordinary actions.”
No matter where your political affiliations lie, if you want to join the protests locally in the Dallas/Fort Worth area, here is a list of “Tea Party” protest locations.
Arlington
4:30-7:30 p.m.
River Legacy Park, 701 NW Green Oaks Blvd.
arlingtonteaparty.blogspot.com
Burleson
3-7 p.m.
Burleson Commons, 1501 SW Wilshire Blvd.
www.burlesonteaparty.blogspot.com
Dallas
6-9 p.m.
Dallas City Hall
Fort Worth
6- 8 p.m.
LaGrave Field, 301 N.E. Sixth St.
Hurst
Time TBA
Hurst City Hall, 1505 Precinct Line Road
Southlake
Noon-1 p.m.
Town Square Pavilion (Rustin Park in Front of Town Hall)
Weatherford
4-7 p.m.
First Monday Trade Grounds, 200 Santa Fe Drive
weatherfordteaparty.blogspot.com
Senate’s Delay In Bankruptcy Reform Could Bring More Changes
March 25, 2009
A report on USA Today’s Web site written by Christine Dugas shows that the U.S. Senate’s delay in changing bankruptcy law to allow judges to change the terms and interest rates on mortgages may bring even more changes to the law regarding credit cards.
Dugas writes…“Congress wrangled for eight years before passing a reform act aimed at curbing abuse and ending an alarming rise in bankruptcy filings. With the economy in tatters and personal fortunes often in even worse shape these days, the bankruptcy law is beginning to undergo scrutiny again.”
Dugas contends that once the mortgage issue is settled, “attention will turn to the 2005 bankruptcy reform.”
“There is continuing concern about the bankruptcy-reform bill and what its effects have been,” says Sen. Sheldon Whitehouse, D-R.I., who leads the Senate Judiciary subcommittee that oversees bankruptcy law. “We are looking at a number of things that we can do to address the problems.”
The reform passed in 2005 made bankruptcy filing more costly and more difficult, according to consumer advocates. It created more hurdles, such as the “means test” and mandatory credit counseling, for those who are experiencing financial difficulty to clear before they can get help from bankruptcy.
Dugas reported that Whitehouse was scheduled to “hold a hearing that will discuss legislation he has introduced that would allow families burdened by exorbitant credit card rates and fees to more simply discharge their debt under bankruptcy. He is considering several other proposals.”
Sounds like someone in Congress is working for the people, and not the banks.
Congress Expected To Reach Compromise On “Cramdown” Legislation
March 4, 2009
Democrats in the House of Representatives, under pressure from a group of moderates in their ranks and the banking lobby, agreed to restrictions on legislation that would give bankruptcy judges the power to change the terms of a mortgage by the reducing interest rate or principal.
The legislation, which the House could vote on by Thursday, will require the judge to consider whether a homeowner had been offered a reasonable deal by the bank to rework his or her home loan before seeking help in bankruptcy court. It also puts the responsibility on borrowers to prove that they tried to modify their mortgages.
The measure is another piece of President Obama’s plan to stabilize the housing market and reduce the number of foreclosures. It follows several initiatives aimed at getting banks to modifiy mortgages for distressed homeowners who are in danger of losing their homes.
Promises To Modify Mortgages “Mere Commercial Puffery?”
January 15, 2009
Countrywide Home Loans has made a concerted effort to tell everyone, including Congress, that they are working hard to modify mortgages for borrowers caught up in the sub-prime lending crisis, except maybe for their attorneys who are defending them in a lawsuit in New Hampshire, according to an article on MSNBC.
Attorneys for the California-based mortgage giant told a New Hampshire court in a filing seeking dismissal of a suit that alleges breach of good faith, fraud, negligence and misrepresentation, that modification offers are “only vague advertisements.”
That might explain why more than 860,000 homes were foreclosed on in 2008, and why most banks and their trade organizations oppose allowing bankruptcy judges to modify mortgage loans.
Congressional leaders are pushing to allow judges to modify interest rates, terms and balances of mortgages for homeowners in Chapter 13 bankruptcy.
Bankruptcy attorneys across the country have pushed for the change since the foreclosure crisis began in late 2007.
They point to the successful use of Chapter 12 bankruptcy and the modifications to farm loans that led bankers to negotiate with family farmers and slowed the rate of foreclosures in the 1980s. A Tennessee bankruptcy judge even wrote an opinion piece for the Daily Tennessean that outlined how he believed changes to Chapter 13 that would allow judges to modify first mortgages would help.
Bankruptcy law already allows judges to modify mortgage terms on business property or a second home in a Chapter 13 case. Why not allow homeowners the same option to stay in their first home?
Citibank Voices Support Of “Cramdown” Legislation
January 9, 2009
In a dramatic about-face Citibank’s chief executive voiced support Thursday for a Senate bill that would allow bankruptcy judges to modify mortgages for persons seeking Chapter 13 bankruptcy.
In letters to congressional leaders, Vikram Pandit praised the measure, saying that “given today’s exceptional economic environment, we support its swift passage.”
The bill, sponsored by Democratic Senator Dick Durbin of Illinois, would allow bankruptcy judges to modify the terms of mortgage holders who are seeking bankruptcy protection. Judges will be allowed to extend the term and/or lower the interest rate and principal on the loans.
Under terms negotiated with Citibank and other banking interests, the law will apply only to mortgage loans made before the bill is enacted.
Congressional leaders say that the bill will force the hand of banks who have been slow to negotiate loan modifications with homeowners who have fallen on hard times financially. Democrats are pushing for banks to modify mortgages in an attempt to halt the rise of foreclosures in the United States.
Critics point to a report issued by the Comptroller of the Currency shows that 37% of homeowners whose mortgages were modified in the first quarter of 2008 were in default again in six months to argue against the plan.
They also say that it will undermine contract law and drive up the cost of borrowing for everyone.
Since the November election gave Democrats larger majorities in both the House and Senate, many expect that the measure will pass. President-elect Barack Obama has voiced his support in the past for allowing bankruptcy judges to modify mortgages.
Tribune Company Files Bankruptcy
December 8, 2008
Tribune Company, owner of KDAF-TV 33 in Dallas, newspapers like the Los Angeles Times and the Chicago Tribune, the Chicago Cubs and Wrigley Field, will file for Chapter 11 bankruptcy protection in Delaware.
The Associated Press and the Wall Street Journal are reported recently that the company had hired financial advisers to guide it through a bankruptcy filing.
Tribune was taken private in a $8.2 billion buyout led by Sam Zell last December. The company said last week that its debt load had increased to $11.8 billion, up from $9.4 billion in December of last year.
The company had expected advertising revenue at its newspapers to pay the principal and interest on its debt, but the economic slowdown has forced declines in that sector making it likely that Tribune will not have the cash flow to pay the $1 billion in interest payments that are due this year.