Q is for Qualified Written RequestA Qualified Written Request allows borrowers to obtain information from their servicer without having to file a lawsuit. You want to save your house and a foreclosure is looming but you’re pretty certain that the lender is claiming you owe more than you actually do. While not part of the bankruptcy code, 12 U.S.C. 2605 is a tool that may assist a debtor to keep their home with or without a bankruptcy filing.

It is common for a lender or mortgage servicer to claim that you owe more money than you think you do. Sometimes these accounting errors even cause you to default on your loan. Some of the common errors are:

  • Compounding interest when not allowed
  • Failure to make timely tax payments thus incurring late charges
  • Failure to properly apply payments made to your account
  • Improperly crediting payments you make
  • Charging impermissible late fees
  • Refusing to accept your payments because there is a difference in balance due and sum paid
  • Forcing insurance on you when you already have shown proof you carry it

Send a Qualified Written Request

The Real Estate Settlement Procedures Act (RESPA) provides for the Qualified Written Request (QWR). As Max Gardner says, “a reasonable QWR can provide the attorney for the Chapter 13 debtor with some of the very best discovery outside of a contested case or Adversary Proceeding.”The servicer must acknowledge your request within 20 work days of receipt and respond to your inquiries within 60 work days. You must include enough information in your request so that the servicer can identify your mortgage account. Usually an account number along with your name and the property address will work. You should also include any errors you believe occurred and clear requests for information.

Ask for a complete transaction history of the loan including all payments and charges. Also ask for the transaction codes and definitions so you can understand the history. You’ll also want any Pooling agreements; the name and contact information of a person to speak with about your account; the name of the current holder of the note; and copies of all correspondence, communication and collection documents related to your account. With this information you will be able to find out what is happening to your account and who owns your mortgage.

What If My Lender Won’t Respond?

There is also a provision in 12 U.S.C. 2605(f) that allows for reasonable attorney fees and costs if the lender or servicer fails to comply with your request.

Other Q articles:

Image courtesy of takomabibelot.

Preference sounds good, right? Maybe, maybe not. If you pay child support or taxes before paying other creditors, that’s okay. If you make your house or car payment before paying your Visa bill, that’s okay. So what can’t I do?

Insider Preference Payments

You can’t pay your mom back that $2,000 she loaned you before you pay the Visa bill, if you do it within one year before you file for bankruptcy. It is considered a preference and the trustee can set it aside. In other words the trustee can sue your mom to recover the $2,000 payment. Why can they do that? Because it is considered unfair under the U.S. Bankruptcy Code. The code is concerned with fairness all around. Fairness to you the debtor and to all the creditors that you owe money to.

You can’t make any preferential payment to a friend or family member in the year before filing bankruptcy or the trustee can recover it. So be careful of repaying your uncle, sister, brother, mother, father or friend in the one year period before filing for a bankruptcy. Your brother would likely be upset to find out that the money you gave him to repay your loan will be taken by the trustee. Either wait to file the bankruptcy so a full year passes, or wait to make the payment until after the bankruptcy case. There is nothing in the law that stops you from paying back a loan after it has been discharged in bankruptcy.

What About Other Creditors?

Any payment over $600 to a credit card company or other creditor (medical provider, personal loan, other loans) within 90 days of filing bankruptcy is also a preference payment that can be set aside.

A preference payment doesn’t have to be cash, check or money. It can also be a transfer of your property. For example, you owe a friend some money and they agree to take your bicycle in trade. Talk to a knowledgeable local bankruptcy lawyer about your payments. They’ll ask you questions and dig into your facts so you can avoid any unpleasant surprises.

More P’s:

Image Credit: Leo Reynolds

 

O is for Organize

Organizing is something that may be hard to do. Many of my clients have been putting their heads in the sand and leave mail unopened and unorganized until they see me. It is a normal tendency to ignore things that feel out of control. When those bills and collection letters come flooding into your mail, it can be overwhelming.

The first step to getting a handle on things is to tackle organizing those bills and other unopened mail. It doesn’t matter what is in there for now. It could be unopened mail, opened mail, or all mixed up. You need to find and organize all your financial information before you can file a chapter 7, or chapter 13 bankruptcy.

Set aside a block of time, even if it is only a twenty or thirty minute window. Gather up all that paper and find a place to begin to sort it. Somewhere you can leave the project and return to it is ideal. Have several bags or boxes handy. You may want one for trash, one for recycling and one for documents that need to be shredded. Label each bag or box.

Start with the steps below and get as far as you can in your scheduled time. When you are ready set aside another block of time and continue through the steps. Repeat until complete.

Organizing Mail Steps

  1. Open it everything. Use a letter opener or some other tool to make it easier. Toss all the envelopes that the bills and statement arrived in into your recycle bag. There is no need to keep that extra outside wrapper.
  2. If you are unable to pay the bills and are planning to file bankruptcy, or you pay your bills online, you can also toss the return envelopes into your recycle bag.
  3. Sort by type – medical in one pile, credit card bills in another. Utility bills and ongoing household expenses in another, etc.
  4. Sort each type file by creditor or sender. All PG&E together, all Chase cards together and all Aunt Susie’s letters together. Put all Chase collection letters (from agencies and lawyers) with the original Chase bills.
  5. If you have more than one account with a creditor (like two separate American Express card accounts) separate those accounts in different piles.
  6. Organize each creditor pile by date with the most recent on the top.
  7. Finally, place each stack into a file folder and label the folder with the creditor name and the last 4 digits of the account number. In my office we prefer that you do not use staples. If you bring in paper we will scan it and return it to you and staples only slow down the process.

Congratulations! Your bills are now organized and ready to work with whether you are looking at debt consolidation plans, a bankruptcy or just want to know how much you owe. For some tips on charting your financial future click here to read Cathy Moran’s article.

More Bankruptcy O’s:

Image Credit: Leo Reynolds

The California Northern Bankruptcy Court is the area or district that our firm covers. California has four bankruptcy court districts – California Central Bankruptcy Court, California Eastern Bankruptcy Court, California Northern Bankruptcy Court, and California Southern Bankruptcy Court. Each district is made up of different divisions. Each division has a different court location and different practices and procedures.

People sometimes ask me if I will go to a different district so I can take their case. This is something that I rarely do because of the additional time that I would have to put into handling the case. It is usually best for me to refer the person to a colleague that works in that district. Not only would I have substantial additional travel time but in most cases I would have to spend time finding out what the local rules require and what practices vary in that district.

Isn’t the Bankruptcy Law the Same in Every Court?

It’s true that the federal law is the same for all bankruptcy courts. But it’s equally true that each district has its own specific procedures. Not only that, but each division within a district has its own local rules and practices. California Northern Bankruptcy Court has an Oakland Division, a San Jose Division, a Santa Rosa Division, and a San Francisco Division. Each of these divisions has its own judge(s) and trustees and its own local practices and policies.

What Counties are in the California Northern Bankruptcy Court District?

California Northern Bankruptcy Court encompasses the following: Alameda and Contra Costa counties are in the Oakland Division. San Benito, Santa Clara, Santa Cruz, and Monterey counties are in the San Jose Division. Del Norte, Humboldt, Lake, Marin, Mendocino, Napa, and Sonoma counties are in the Santa Rosa Division. San Francisco and San Mateo counties are in the San Francisco Division.

If you are considering filing bankruptcy find out what division and district your prospective attorney is familiar with. It is generally best to choose one who has some experience in the court where you need to file.

Other California Divisions can be found at the United States Ninth Circuit Court Locator.

Additional N posts and a place to find bankruptcy attorneys in other areas:

Image Credit: Leo Reynolds

Renting After BankruptcyGoing through a bankruptcy is a trying experience, especially if it was brought on by foreclosure.  Your life is turned upside down, and now that it’s all over you’re given the chance to get things back on track.

A central problem is one of basic shelter – how to find a place to rent now that your credit report looks like it’s been shot full of holes.  You’ve got to move quickly, so it’s best to start preparing with these simple steps right away.

Bankroll Those Mortgage Payments

If you’re behind on your mortgage and waiting for the foreclosure to be finalized, take the opportunity to start saving at least part of what you’d otherwise be sending to the mortgage company.  You can amass your savings once the bankruptcy case is filed (that is, if it was a Chapter 7 bankruptcy case) without worrying about the trustee or creditors coming after it.

Those funds will come in handy not only for moving expenses, but also to provide for a greater security deposit or advance payment of rent to your new landlord once you’re ready to move.

Stay On Top Of Your Credit Report

Most landlords will check your credit report as part of a pre-screening process, so you’ll want to be sure that everything is accurate.  You won’t be able to do anything about the fact that the bankruptcy will appear on your credit report, but you can minimize the negative impact by ensuring that all of your other accounts properly reflect the bankruptcy discharge.

Organize Your Records

Often, landlords and other post-bankruptcy creditors will ask for proof of your bankruptcy filing and discharge.  They want to be sure the case is over, who you discharged, and whether there were any problems.  By keeping copies of all bankruptcy papers, you’ll be able to document where you were, where you are, and what you’ve left behind.

Don’t Forget The Mortgage Lender

The banks are sitting on hundreds of thousands of homes nationwide, and they’re not so happy about it.  If you’re looking for a place to live, consider picking up the phone and finding out if your mortgage lender will let you stick around for awhile and just pay rent.  You may find that the lender is grateful to have someone in the house to maintain it and keep the pipes from freezing over.  You’ll benefit by being able to keep continuity in your living arrangements.

Jay S. Fleischman is a consumer protection attorney focusing on helping people fight back against creditor harassment and credit reporting problems after bankruptcy.

Image credit:  sfllaw

What is this “Means” Test I Have to Pass?

The means test is used by the courts to determine eligibility for Title 11 of the United States Code Chapter 7, or payments in Chapter 13 bankruptcy. It was designed to prevent debtors who have sufficient financial means to pay a portion of their debts from liquidating them entirely in a chapter 7 bankruptcy.

During the Great Depression, the test was used to screen applicants for such programs as Home Relief in the United States, and starting in the 1960s, for benefits such as those provided by the Food Stamp Program. In 2005, the United States bankruptcy laws changed by adding a means test to purportedly prevent wealthy debtors from filing for Chapter 7 Bankruptcy. This 2005 BAPCPA change is found in 11 U.S.C. § 707(b).

If you are in the military or have a majority of non-consumer debt you are exempt from the means test income guidelines. Non-consumer debts are mainly those incurred for business or profit purposes, tax debt and tort debt.

Is Your Income Less Than the Median?

Debtors whose income is below the state’s median income pass the means test. To check your median income you must first determine your household size. Gross wages, business income, pension, family support, unemployment, regular gifts and other income is included. Social security payments are not included.

The median California incomes as of March 2012 are:

1 person – $47,683

2 persons – $61,539

3 persons – $66,050

4 persons – $74,806

5 persons or more – Add $7,500 for each person in excess of 4.

If your income is below the median you go no farther with the form or the calculations. STOP you are done. You can file for chapter 7 and do not need to complete the rest of the form.

What If My Income is Over the Median?

In Marin County we often see the situation where the income exceeds the median but there is not enough left to pay the creditors. In this case the long form of the means tests must be completed. The long form factors in expenses like mortgage payments, payments for taxes, insurance, costs of education, healthcare costs and insurance costs. Most people who need help find that they pass the means test.

If you pass the means test it means that you can file a chapter 7 bankruptcy. Just because you can file under chapter 7 doesn’t mean it is the best chapter for you to file under. If you are trying to catch up with mortgage payments or have unsecured liens on your property a chapter 13 would likely benefit you more.

Please see the following for more M posts:

Image Credit: Leo Reynolds