The new standards can be found at the following site if you want to see how your family budget would measure up:     http://www.irs.gov/individuals/article/0,,id=96543,00.html

There were numerous changes in the types of expenses which are permitted, such as some were lumped in with others (cellphones, for example, are not to be listed separately) and food no longer increases based on a sliding scale based on how much a debtor makes.

(Courtesy of National Association of Consumer Bankruptcy Attorneys)

The new bankruptcy proposals  before Congress may change that but it is too early to tell. The Senate version, S. 2136, is to be considered by the Senate Judiciary Committee in January or February, 2008. Write your senator if you want help from this law.

The House Judiciary Committee passed its version, H.R. 3609, on December 12, 2007. It is called The Emergency Home Ownership and Mortgage Equity Protection Act. The House is expected to vote on this early in 2008. Write your congressman if you want to benefit from this Act. 

H.R. 3609 allows a bankruptcy judge to modify, or change, a debtor’s mortgage in a chapter 13 bankruptcy. However, it has restrictions:

-it covers existing loans only and only loans made after 1/1/00.

-it covers nontraditional loans and subprime loans only.

-it applies only where there’s a notice of foreclosure.

-it sunsets (this means it no longer exists) after 7 years.

-it has guidelines for judges so that they will not cramdown the value of a house below fair market value or reduce the interest rate below conventional mortgage rate.

How to fix this?

The 1/10/08 edition of the American Bankruptcy Institute’s website, ABIWorld.org, reported that  Allstate Insurance  said that it’s seen an increase nationally in arson among homes in foreclosure. In California, the state’s insurance division said questionable residential fires increased in 2007 76% over 2006. Well, some people say that that’s always been some folks’ solution, but I do not advocate that.

Congress is considering two bills, S. 2136 and H.R. 3609 (which has passed the House Judicial Committee), both of which would allow debtors to file bankruptcy to modify their mortgages. The bills are not law, yet, so write your Senator and Congressman supporting these efforts.

William F. Buckley said in a 1/3/08 article in the National Review that the federal government is the only agent which can solve the subprime mortgage crisis and should have a moratorium on foreclosures for homes where there is a disparity between the true value of the home and the hypothetical value until the disparity is resolved (ABI World.org 1/8/08). When you have a conservative pundit like WFB, who actually is a thinking conservative, calling for government intervention, we all should listen. Write your congressman and senator. 

Other issues the Bar grappled with this year included the Court’s actually requiring chapter 13 plans to be feasible (which means that the client’s budget must actually show that the debtor can afford to make the plan payment, and all other living expenses, and not just a deflated “$25/month for beans/food” for 5 years’-type budget. The idea was to cut down on the number of dismissals by limiting the number of shaky cases which are filed). The SC courts have not enforced this in the past, which, while that created more tottering cases which were dismissed, it gave people who otherwise were going to lose their homes one last chance to turn their income around in a very short window of time; and people did do that.

All year long we argued about Section 524(i) and whether debtor’s counsel can include language from it in their plans or whether that is objectionable. Some argue it is necessary to include it in order to hold the banks’ feet to the fire when they misapply funds during the course of a bankruptcy. Others argue it is not necessary, as it is in the Code and putting it in the plan is not necessary to have the right. Another argument is that our plan is a form plan and we just cannot modify its terms. Of course, the opposite camp says that we can and should be able to do so. These issues are still working their way through the courts and being debated on the debtors’ attorney listserve.

We obtained a new method of attorneys’ fee payment from the Courts which took effect (I think) in June (I am too lazy to look it up right now; it was around then). It necessitated a new form plan. Of course, we have what I should call a Really new method of attorney’s fee payment from the Courts which takes effect January 1, 2008 and necessitated a new form plan. I am not repeating myself. It’s just that in bankruptcy law, since the law changed in 10/05, especially, things just keep changing pretty regularly. 

Also, a really annoying thing that has been going on more this year than ever before is that the trustees are taking people’s tax refunds for any year for which a refund is owed at the time of the filing of the case (this does NOT affect future years, so don’t panic). This has been happening for years and is perfectly permissible but it has gravitated from being an issue that is a problem from January til May to almost being a yearround issue now that the trustees are prorating the refund due for a given year and claiming the right to take the amount owed for the year in which the debtor files bankruptcy, even if it is 6-7 months before returns are due. Attorneys must really pay attention to clients who get big refunds every year and do some planning if their clients expect to keep all of that refund.

I am sure that there are a lot of other Ivory Tower issues that I did not address which just don’t spring to mind; but  it’s been a long day and I’m tired; and I am taking a watercolor class and I have homework to do for tomorrow night or I will be the unprepared idiot in the class; it’s hard enough being the least talented one there. Anyway, now that the “Bankruptcy Year in Review” is done (more like d.o.a.), i will start trying to do a daily blurb on a particular issue, just a short summary of whatever ridiculous or scary law or situation is on my mind.

So, I came�up with the bright idea of at�least doing a Year-End Roundup, highlighting whatever I had done, education/office-change�� -wise, and�trying to recap a few major changes in the law or the practice in SC and NC that I remember. THEN I will try to blog daily.���

In January, I went to Washington, D.C. as part of�a National Association of Consumer Bankruptcy Attorneys group� who was trained by our lobbyist, Maureen Thompson, and we spent a couple of days meeting with members of the “new” Congress regarding�the new bankruptcy law and changes we would like to see�or actions we wanted, such as oversight hearings regarding the U.S. Trustee (in�hindsight, we got this and numerous other things). I met�with Congressman John Spratt,�representatives of�Senator Lindsey Graham’s office�and of Congressman Jim DeMint’s office. They seemed receptive to supporting change.

In March, 2007 I went to Max Gardner’s Boot Camp at his Lizmere Farm in North Carolina, which is a four-day intensive session teaching us the nuts-and-bolts of his Litigation Model for improving our practices and pursuing banks, collectors�and loan servicers. It was a motherlode of information which I am slowly incorporating into my practice. The first step for me was to get a laptop, clean up my forms system and go paperless and wireless, which we finally did December 1, 2007.

In 2008 I hope to wade into the loan servicing and discharge violation litigation. This should help my clients keep their credit clear after bankruptcy and protect them from overpaying on their mortgages while, inevitably,�they are�serviced by someone other than the lender from whom my clients obtained their loan.��I sure saw a lot of evidence of misuse of funds and just bad�practices which appear to be rampant in the loan servicing industry and which appears to have gone unchecked for�years�(you know how every loan you get is�SOLD to another�lender after you close on the loan? Simply put, it is sold to a “Loan Servicer” which collects the money for investors who are hoping you will make your mortgage payment so that they actually�can�get the money/return that the investment bank who sold the investment in your�stream of income promised they would get…..as you�can see from the news these days, that return on investment is not happening these days and�”reputable”�houses like Bear Stearns are having to borrow literally billions from the Chinese and Saudis just to keep afloat because of these lousy investments…..at least it would be easy to argue that).

In May, 2007 I went to the annual convention and seminar of the National Association of Cosumer Bankruptcy�Attorneys (NACBA)�in Philadelphia. I am the SC State Chair for NACBA and we had a breakfast with the SC attendees while we were there. This always is a great overview of bankruptcy law from the debtors’ perspective and it shows you the cutting edge issues that aren’t always put forth at more moderate presentations. Most of the former attendees of Max Gardner’s Boot Camp who were there met for dinner one night to see how we were implementing the Model. These groups have been very helpful in that�I�have met really good�bankruptcy lawyers from all�over the�United States and�am able to email them with questions about their states’ laws. This is�helpful�since the exemptions, or what we can protect in a bankruptcy, could depend on where a person has lived for the two years before�he moved to SC or NC.

In July, 2007 I was named NACBA’s State Chair of the month, which was pretty cool. There were no cash prizes, but I did get a warm, fuzzy feeling for it.

In August we went paperless. Then my paperless paralegal left for greener pastures (family business….I hope the paperless thing did not run her off)….so we delayed until December 1, 2007. So far, it is working out really well. My new paperless person, Meredith Emerson, is keeping everything working smoothly.

During the year in SC several of us�worked to organize the attorneys who represent people who file bankruptcy, or debtors. Several of us�tried to get everyone to join NACBA so we could act as one voice, and a lot of attorneys did, or at least they renewed their membership (of course, we could have had nothing to do with that). Anyway, we now have a secure listserve and post questions to and argue with�each other. It is very helpful when, as happens daily or at least weekly, �a new question comes up for one of our clients and the answer isn’t clear in the law, or it has never happened here before (which has happended a lot since the New Bankruptcy Law, or BAPCPA, in the last 2 years). We have had one telephone teleconference meeting of our group and when we went to the SC Bankruptcy Law Association conference and seminar in September, our smaller group had our first face-to-face meeting. I hope to do another teleconference soon.

Along the lines of speaking with “one voice” we�sent representatives to�meet with one of our�bankruptcy judges regarding the new chapter 13 repayment plan and the provisions relating to the payment of attorneys fees under it. This would allow more attorneys to take less money up front to do a chapter 13, as it won’t take so�long and be such a risk to put the money in the plan.�

In September, 2007 I went to the SC Bankruptcy Law Association annual seminar in Asheville. This is a group of most of the SC attorneys who represent debtors, creditors, and�the government (the U.S. Trustee, Clerk of Court for the US Bankruptcy Court, the SBA, the IRS, the U.S. Attorney who represents the United States government in court, & the SC Dept. of Revenue) as well as the Bankruptcy Judges and their Clerks. It is a good place to get a balanced perspective of the law as it has developed in the last year and�to meet with people with whom we deal on the phone all the time but may not get to see or argue with in person. The judges’ clerks always�give an overview of what�they think are important cases/trends, and�the judges do the same thing. The U.S. Trustee usually gives its overview of where the government is headed regarding particular issues and our Clerk of Court usually presents its State of the Clerk’s Office address. This is when we had our NACBA meeting as well, as a short�morning session.

The rest of the year has been spent implementing paperless, dealing with being gone from the office, and dealing with what has been, if not an increase in actual filings, but an increase in people coming in to see me. I heard the other day (theoretically, lawyers are notorious gossips) that bankruptcies increased in 2007 by 40%. I doubt that that is what has happened in SC, but I certainly am busier. However, 40% of NOT MUCH is still nothing to crow about if you are counting increases.

I have seen way too many people who are suffering from lousy mortgages. By that I mean variable loans that they cannot afford when they adjust even once….I am seeing numerous folks from the same neighborhoods coming in. It is very sad to see. I am seeing lots of folks come in who have higher end jobs…well HAD is the operative verb; I’m seeing bankers and formerly self-employed or small corporate owners who finally have to admit that they are overwhelmed when they lose their jobs; and, of course, I am seeing people with 100’s of thousands in medical bills and no health insurance.

One thing that�might happen in 2008, and I am working on that a little bit (my really smart friend Dana Wilkinson drafted a version of the bill), is we are hoping to get INCREASED SOUTH CAROLINA HOUSEHOLD EXEMPTIONS! This would not be for the actual residence because the homestead exemption for SC just increased in 2006 from $5000 per person to $50,000 per person, which was the first time it had increased since 1981. We are trying to introduce a bill this session of the SC legislature which would bring the rest of the things we can�protect, or exempt, from creditors in bankruptcy or in general in line with the rest of the Southeast. Right now, the exemptions are pretty low and also have not changed since 1981. Think of what’s happened to jobs, the cost of living, etc….since 1981. This change would be excellant and would help ordinary folks when their fortunes change by protecting their assets from their creditors. It would also help more folks be able to file bankruptcy without losing anything. Finally, it should encourage entrepeneurship, as the basic necessities of life would be protected if you decide to�start your own business and it�doesn’t work�out�like you’d hoped.�

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I see people on Mondays from 8:30 a.m.- 4:30p.m., by appointment only. However, if you have a pressing need, feel free to call, as I am very flexible.

I think I am the only SC attorney with an office in Lancaster County whose practice is 100% bankruptcy. I have almost 21 years experience and have been representing Lancaster County citizens and businesses in bankruptcy court since 1989.

Well, I’m a little late.

Since the site was launched, the In re Evans case was decided by Judge Burris on December 5, 2006, with all 3 SC Bankruptcy judges agreeing with the outcome. The background is that the SC Legislature amended the exemption statute May 26, 2006 by increasing the Homestead Exemption from the paltry $5000 per individual (which it has been since 1982, I believe) to $50,000.00 per individual. This should protect most debtors in SC. However, several chapter 7 trustees objected to several debtors’ claiming it, using, I believe, an 1898 SC Supreme Court case which said that a debtor could only claim the exemptions in effect at the time the debt was made. This did not void the exemptions; rather, it just will be a while before anyone filing bankruptcy would be able to use the exemption to protect their assets, as no debtor would be able to claim the higher exemption until all of his debt was incurred after May 26, 2006. Litigation ensued and the entire SC bankruptcy bar waited for the result which came down in favor of allowing any debtor to use the exemption.

Also since the site launched, I have seen more and more creditors sending 1099’s to the IRS for debts they have written off, which is yet another reason to file chapter 7  if you have a lot of debt, rather than to settle with creditors.

I went to Washington DC on February 12, 2006 to help the National Association of Consumer Bankruptcy Attorneys lobby Congress to help the middle class/working families and to conduct oversight hearings to see if the new law is doing what the creditor lobbyists said it would. I met with Congressman John Spratt and representatives from Senators Jim DeMint and Lindsey Graham, all of whom were helpful.

This Thursday I am going to “Max Gardner’s Boot Camp” where Max Gardner, the unofficial dean of national consumer advocacy, opens up his farm in North Carolina for 4 days of instruction to small classes of 10 people covering the gamut of ways to recover funds for debtors whose creditors have harmed them. I hope it adds a shiny new twist to my practice and ability to help debtors in the bankruptcy court. I think I will be the third SC attorney to attend and we are planning to work together where we can.

The number of filings has increased since this site was launched and the number of inquiries has increased substantially. I find that most of the folks I have seen probably qualify for the type of bankruptcy now that they would have qualified for pre-BACPA, which is good. It means that, for South Carolinians, the new law is mostly just a bunch more paperwork and hoops to jump through. There are, however, a few folks whose options it limits.

Now that I actually have blogged, I plan to blog on a regular basis and discuss topics which may be of interest, such as what I have learned at a seminar, what I have read on the webite of NACBA or the American Bankruptcy Institute, or what new or weird question of law is being discussed/determined/disputed in the bankruptcy courts this week. 

I am going the National Association of Consumer Bankruptcy Attorneys National Convention and Seminar in Philadelphia in April in order to catch up with the latest trends and see what attorneys on the cutting edge of debtor representation are doing.

The group is a collection of attorneys who only represent debtors in bankruptcy cases and I first joined when I went to the seminar in Chicago in July, 2005 called “Fighting Back…” a seminar teaching debtor’s attorneys how to deal with the new bankruptcy law. I went to the national convention in New Orleans in May, 2006, which was a follow-up on the new law and that is where I found out about the need for a SC representative.