Monthly Archives: August 2010

California debtors may be able to use other evidence of pay, if they don’t have paystubs

California homeowners find loan mods not enough

The LA Tiimes reports that loan mods have crashed, perhaps in a sign that homeowners have far more financial problems than just a loan mod can cure. “Even with a substantial reduction in mortgage payment and even some reduction in principal, you still have people who are over their head financially because of their reduced financial circumstances,” independent analyst Bert Ely said. “Isn’t it time to just rethink this whole business of modification … and let the market clear through foreclosures and short sales?”‘ If that seems harsh, perhaps it just speaks to the state of the economy and the …Read more »

Northern California, U.S. bankruptcy filings skyrocket in 2010

Everyone knows bankruptcy is going up, but the numbers released by the U.S. Courts on Friday are pretty shocking. The big picture: Consumer filings up 21 percent from a year ago, and Chapter 7 filings up 25 percent. Chapter 13 filings are up 10 percent. Drilling down into California, we find the state definitely in the top 10 but not the worst-off. Nevada was No. 1 in Chapter 7 filings with 8.71 filings per 1,000 residents and a whopping 11.23 per 1000 people in all types of filings. California came in 6th (5.05 per thousand) in Chapter 7s, 13th (1.44 …Read more »

The myth of bankruptcy abuse

The 2005 bankruptcy reform act was supposed to put an end to “absusive” filings. But recent data shows that in bad times like these, filings have returned to pre-2005 levels. A study by Ronald C. Mann and Katherine Porter published in the Georgetown Law Review, entitled Saving Up for Bankruptcy reported this shocking statistic (from a 1998 study): Bankruptcy relief would have afforded an economic benefit to about 15% of (the study group), but only about 0.66-1% sought relief any given year. In other words, the authors point out: Most families in serious financial distress do not file for bankruptcy.

Valuing a business without value

In this interesting post, M. Jonathan Hayes addresses the problem of valuing businesses that really have no value. I am listing the assets on schedule B at a value of zero but the exmeptions on schedule C as the full amount of the wildcard, roughly $23,000. So schedule C says, “Asset – interest in partnership – value zero. Amount claimed exempt – $23,000.” I expect to get some guff from the trustee who will say there must be some value if we are exempting it and if no value, the exemption should be zero. I will point to Schwab and …Read more »

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