HAMP Program Expired: Now What?

By Sam Turco on January 2, 2017 Posted in Chapter 13, Foreclosure

The Home Affordable Modification Program (HAMP) expired December 31st. After eight years of assisting underwater homeowners save their homes from foreclosure, the program has now ended.

Approximately 10 million homes were lost to foreclosure in the past decade. HAMP helped lessen the mortgage meltdown, but its job is now complete. Foreclosure sales have diminished and home prices are now almost equal to the market prices just prior to the housing market bubble bursting in 2008.

So now what?

According to the folks I chat to in the foreclosure industry, expect mortgage service companies to tighten standards and foreclosures to gradually increase during 2017.

Without HAMP, homeowners seeking loan modification will be left at the mercy of lenders.” Dillon Graham, Florida foreclosure defense attorney.

The Consumer Financial Protection Bureau has issued lending guidelines to help reduce the number of foreclosures in the future, including an emphasis on

Federal Tax Liens in Chapter 7 Bankruptcy = Danger

By Sam Turco on December 29, 2016 Posted in Chapter 13, Chapter 7, Homestead Exemption, Tax Liens

The existence of a Federal Tax Lien in a Chapter 7 bankruptcy case is a dangerous thing. Especially in cases where a debtor has substantial equity in a home or other assets.

Why are tax liens so dangerous? Because property exemption laws, such as the Homestead Exemption, do not apply to federal tax liens.

Exemption laws protect a debtor’s property when they file bankruptcy. For example, the Nebraska Homestead Exemption protects up to $60,000 of home equity (the difference between the home’s value and the balance of the mortgage). So, if a debtor owns a home worth $100,000 and the home is subject to a mortgage loan of $40,000, the home is generally protected in chapter 7, unless a federal tax lien is present.

What is alarming is that most bankruptcy attorneys seem to be oblivious to the fact that federal tax liens are

Can Gage County Discharge Intentional Wrongdoing in Bankruptcy?

By Sam Turco on December 20, 2016 Posted in Uncategorized

Bankruptcy Code Section 523(a)(6): A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt . . . for willful and malicious injury by the debtor to another entity or to the property of another entity.

A federal jury has awarded $28.1 million to six plaintiffs (the “Beatrice 6”) for a reckless investigation and manufacturing false evidence conducted by the Gage County Sheriff’s department. The plaintiffs spent 20 years in prison for the 1985 rape and murder of Helen Wilson, but DNA testing conducted in 2008 revealed that the murder was actually committed by another individual, Bruce Allen Smith.

Following their release from prison, the plaintiffs brought suit in Nebraska federal court for the Sheriff Department’s building a case on coerced false confessions.

As a result of this judgment,

Wells Fargo Using Arbitration Clause to Dismiss Fake Account Cases

By Sam Turco on November 29, 2016 Posted in Bankruptcy Fraud, Fraud

Wells Fargo is asking courts to dismiss lawsuits brought by customers for damages caused by fake accounts created by bank employees because of arbitration clauses signed by those customers when they opened bank accounts.

A typical arbitration clause contained in the fine print of bank account agreements looks like this:

ARBITRATION AGREEMENT

Binding Arbitration. You and Wells Fargo Financial National Bank (the “Bank”), including the Bank’s assignees, agents, employees, officers, directors, shareholders, parent companies, subsidiaries, affiliates, predecessors and successors, agree that if a Dispute (as defined below) arises between you and the Bank, upon demand by either you or the Bank, the Dispute shall be resolved by the following arbitration process. However, the Bank shall not initiate an arbitration to collect a consumer debt, but reserves the right to arbitrate all other disputes with its consumer customers. A “Dispute” is any

Why Long-Term Financial Goals Are So Important

By Sam Turco on November 18, 2016 Posted in Budgeting, Chapter 13, Chapter 7, Medical Bankruptcy

Do you know where you want to be in 20 years? What does that picture look like?

When facing debt problems, it is very important to envision what you want your financial life to look like in 20 years. Because when you fail to have a clear vision of what the ideal life looks like, you tend to repeat the present problem. Sure, you may get out of today’s financial mess, but then old habits return and the problem resumes.

When facing that life changing debt struggle, it is very important to write down very specific financial goals. Very specific goals.

I want my home paid off by age 55.
I will save up 6-months of wages in a savings account.
I want to take my grandchildren to the beach every summer until I die.
I want to quit my

Chapter 13 Success Rate Greater Than Credit Counseling Plans

By Sam Turco on November 1, 2016 Posted in Chapter 13, Chapter 7, Credit Counseling

Do Chapter 13 payment plans really work? How many customers actually finish the plan and become debt free? How does it stack up to other options like consumer credit repayment plans? If you don’t know how likely a plan of action will succeed, how do you know what to do?

Historically, only one in three chapter 13 cases are completed nationwide. That is a pretty bad success rate in my opinion. Law professor Katherine Porter (@bankruptprof) wrote a provoking article about chapter 13 success rates in 2011 that basically called for an elimination of chapter 13 cases. Her study confirmed the dismal success rate of these cases.

Chapter 13 is a pretend solution. I use this term to mean a social program that does not work as intended but is not critiqued or reformed because its flaws are hidden.

That study always struck

Has Wells Fargo Committed Bankruptcy Fraud?

By Sam Turco on October 20, 2016 Posted in Bankruptcy Fraud, Chapter 13, Chapter 7, Credit Cards

Wells Fargo Bank has admitted to opening millions of customer accounts and credit card accounts without customer authorization since 2005. Stories have emerged of a bank gone wild where employees working in an intense sales culture felt pressured to open new accounts to meet sales quotas.

Wells Fargo has agreed to pay $185 million in fines to the Consumer Financial Protection Bureau.

So what happens when customers file bankruptcy on credit card accounts fraudulently opened without any authorization? Naturally, Wells Fargo filed bankruptcy Proof of Claims with the court itemizing the amounts not legally owed. And that reality leads to the next logical question: Has Wells Fargo committed bankruptcy fraud for filing false proof of claims?

False Claims—18 U.S.C. § 152(4):

A person who…knowingly and fraudulently presents any false claim for proof against the estate of a debtor, or uses

Time to Tax Carpetbagger Debt Buyers?

By Sam Turco on October 13, 2016 Posted in Credit Cards, Default Judgment, Garnishment, Junk Debt

Junk debt buyers are the modern version of a post Civil War carpetbagger as they suck money out of every county in the State of Nebraska without contributing anything in return. I cannot think of a single positive thing these debt collectors contribute to our state.

Junk debt buyers typically purchase defaulted credit card accounts for about 3 to 7 cents on the dollar. Common debt buyers include Midland Funding, Portfolio Recovery Associates, Calvary Portfolio Recovery, Cach LLC, Asset Acceptance LLC, and many others.

Debt buyers clog our courts with collection lawsuits. In a sense, the debt buyer is in a race to recover its investment before the debtor is garnished by another creditor or files bankruptcy, so they are quick to file lawsuits after acquiring the debt.

Most junk debt buyers are located outside the State of Nebraska. Consider the damage they do to our state:

Nebraska courts are

Dave Ramsey’s Debt Snowball

By Sam Turco on October 12, 2016 Posted in Budgeting, Chapter 7, Credit Cards, Credit Counseling, Uncategorized

The most famous name in the getting out of debt industry is Dave Ramsey. As a young man Dave himself was in a pile of debt and wound up filing bankruptcy. The pain of that experience lead him on a quest to learn about personal finance and he began a career in advising others how to get out of debt.

I’m a talk radio/podcast junkie. I don’t care what the topic is as long as it is interesting. Dave Ramsey is the host of a nationwide talk show and it played on the radio as I was driving home. So, as I counseled clients every day about how to file bankruptcy, I would listen to Dave on the way home explaining how to avoid it. Gosh, was I doing my clients wrong by not teaching them the tough road out of debt that Dave advocated?

The hallmark

Riding Through the Chapter 7 Backdoor: A Story of Car Loans in Bankruptcy

By Sam Turco on August 19, 2016 Posted in Chapter 7, Reaffirmation Agreement

There is a lot of chatter going on among Nebraska bankruptcy attorneys about reports of court hearings where debtors are being told they can keep a car even if they choose not to reaffirm the car loan as long as payments are kept current.

That’s news to me and many of my colleagues. The Bankruptcy Reform Act of 2005 was supposed to end the Ride-Through option. A “ride-through” is where a lender cannot legally repossess a vehicle even if the debtor does not sign a formal Reaffirmation Agreement as long as the loan was paid current.

A reaffirmation agreement is an agreement to pay a debt (typically a home or auto loan) listed in a bankruptcy case. Reaffirmations basically pull a debt out of the bankruptcy and makes a debtor liable again for the payment. Secured debts tend to be reaffirmed in Chapter 7 and unsecured debts almost never. Clients