Is Chapter 7 Bankruptcy Broken?

first_imgAccording to the U.S. Courts website, the fundamental goal of the Federal bankruptcy laws enacted by Congress is to give debtors a financial “fresh start” from burdensome debts and provides for “liquidation” in a Chapter 7 filing—the sale of a debtor’s property and the distribution of the proceeds to creditors.The Question Is, Does It?Bankruptcy was created to give individuals a legal vehicle to settle debts or negotiate manageable terms. In general, trustees do a great job working with debtors to resolve the vast majority of their debt. However, when real estate is involved, the options outlined in the federal bankruptcy laws are rarely followed, creating greater burden, hampering, or making it impossible for debtors to truly receive a “fresh start.”Bankruptcy law is well defined and offers several solid solutions for both the debtors and creditors, but in most cases, these options are never allowed. It seems hard to believe, but if you dive into the process and the structure of how cases are administered, both the law and the intent of the law take a back seat to reality.In Chapter 7 bankruptcy, a trustee is appointed to administer the case. The primary role of the U.S. Trustee Program is to serve as the “watchdog over the bankruptcy process.”As stated in the Mission Statement: The mission of the United States Trustee Program is to promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders—debtors, creditors, and the public. For this service, the trustee receives a fee for administering the estate and a percentage of any assets sold.Although the Trustee must be fair to the debtor, their interests aren’t always aligned.The Trustee Handbook states: “The Chapter 7 Trustee is the representative of the estate. 11 U.S.C. § 323(a). The Trustee is a fiduciary charged with protecting the interests of all estate beneficiaries—namely, all classes of creditors, including those holding secured, administrative, priority, and non-priority unsecured claims, as well as the debtor’s interest in exemptions and any possible surplus property.”The statement seems pretty straightforward and relatively simple, but where does everything go wrong?Let’s Break It DownWhen an individual files Chapter 7 bankruptcy and they own real estate, they either “retain” or “surrender” the property.If the individual elects to “retain,” they intend to keep their home and negotiate or eliminate the other debts. However, if they chose to surrender, this is where things go astray.When a debtor surrenders a property, the trustee becomes the legal administrator/seller and has a fiduciary to sell the property or give it back to the secured creditor to settle the debt. In most cases, this does not happen.If the trustee sells the property, then they are fulfilling their duty to both secured and unsecured creditors, and will apply proceeds from the sale to unsecured creditors (medical bills, credit cards, etc.) in the estate.Alternatively, the trustee can choose to abandon the property, which removes it from the bankruptcy estate. There are several reasons why a trustee might decide to abandon a property from the bankruptcy. Suppose the property sale didn’t bring enough meaningful value to the estate, the property had title issues, or they could not generate meaningful compensation for the trustee’s time spent working on the case.Often a trustee shies away to avoid scrutiny from governing authorities such as the United States Trustees’ office, which regulates the trustees’ activities. Also, their local judge in the district may have a different view on selling assets because they may be over-encumbered assets.These are all valid issues which stem from a broken system. Trustees, creditors, and even creditors’ counsel become adversarial rather than working together to align all parties’ interests for a positive outcome.Most debtors and their legal counsel believe that once an asset is surrendered, they are off the hook. The onus to resolve the lien falls back on the debtor. The secured creditor has few options when this happens, and if the debtor does not workout financial arrangements with the creditor, they mainly file foreclosure and eventually take possession of the property.This creates emotional turmoil and long-lasting financial hardship on the debtor when their intent was to work out a solution for the surrendered property.To make matters worse, a foreclosure has a much more significant impact on a debtor’s credit future. Bankruptcy or a short sale will impact a credit score about 85–160 points (higher scores have the most significant impact), but this is only short-term, providing the debtors the ability to reestablish their credit in 18-24 months and the ability to buy another home.Foreclosure, on the other hand, stays as a negative mark on a credit report for seven years, preventing the debtor from housing credit and much more. Even after that time passes, a new mortgage will still be at a much higher rate.If a trustee abandons the property and the real estate lien is not resolved while in bankruptcy, the debtor loses the benefit of bankruptcy, suffering total financial hardship, and robbing the debtor of the ability to receive that “fresh start” that is the goal of a bankruptcy.For the secured creditor, selling property in bankruptcy versus foreclosing saves an average of $49,000 on a $250,000 home—a preferable outcome for a creditor to save money and complete a non-foreclosure outcome, but when the secured creditor is denied their right to have the home sold in bankruptcy the mortgage creditor suffers that loss. The courts will argue that they have remediation options outside of bankruptcy.However, since selling in bankruptcy is a much better option and elected by the debtor to have the home sold; not allowing this sale to occur creates significant financial hardship for both the debtor and creditor. This is not the intention bankruptcy law was intended to provide.Why does this happen?Well, several issues lead to this result.The Role of the TrusteeThe trustee is commissioned to administer the debtor’s estate and receives $60 for this service plus a percentage of funds distributed to other creditors in the estate.Trustees are appointed by and report to “The Office of the United States Trustee” (UST). The UST is an executive branch agency that is part of the Department of Justice. Its responsibilities include monitoring the administration of bankruptcy cases and detecting bankruptcy fraud.Trustees are under constant examination from the UST’s office and can be sanctioned for any malfeasance, both real or perceived. The focus is primarily on potential fraud from the trustee receiving fees for the services they provide and rarely is the focus on the benefits to the debtors and creditors. This perceived scrutiny that comes with the sale of an asset often discourages a Trustee from completing their fiduciary duty.Court DistrictsBankruptcy law is federal law; however, it is governed by approximately 94 court districts across the country and differs on its application from district to district.Bankruptcy law clearly defines how real estate assets are sold in section 11 U.S.C. §363. The law goes into great detail for over-encumbered assets, giving the trustee several options depending on the circumstances and the consent of all stakeholders. Today, there are several districts that “do not allow” the sale of “short sales” (over-encumbered assets) either by the UST’s office or the judge.The reasons that short sales are not allowed in certain districts range from differing applications of the law on the transactions. The most common misconceptions are that these transactions are fraudulent and don’t help the debtor, short sales never help the creditor, or that these transactions will only benefit paying professionals and the trustees. These misconceptions by the courts and the trustees are at the heart of the issue. In a proper 11 U.S.C. § 363 transaction, none of these generalizations are founded.This makes you question if the law allows debtors and creditors their rights under section 11 U.S.C. § 363, why are they denied court approval for the sale if they abide by the rules governed by the law?Good Question?Where this doesn’t make much sense is when a debtor elects to surrender their property to be sold and the Secured Creditor (mortgage servicer) has agreed to accept a short payoff, and they agree to pay the trustee a carve-out fee to administer the sale, creating meaningful value to the estate and unsecured creditors.This follows Bankruptcy Code, yet the UST or judge denies the sale. Doesn’t that violate their rights?The law is also clear that when selling fully encumbered property, the trustee must administer the sale to avoid a diminution of funds otherwise available for unsecured creditors, 11 U.S.C. § 704, 28 U.S.C. § 586. The trustee has a fiduciary duty to ensure the law is followed and should sell an asset to settle the debt to protect and preserve funds available to the unsecured creditors. However, this rarely ever happens as the system is broken. Bridging the gap between mortgage servicers, their counsel, and trustees results in a far better outcome for all parties involved.So, how do we fix the process to ensure debtors and creditors can exercise their rights and utilize bankruptcy for the benefits it is intended to provide? It seems this is never a topic for discussion and why most creditors consider bankruptcy as a “black hole.”It might be time to reassess and improve the process.Some potential solutions might be:Modifying the bankruptcy trustee’s compensation to ensure the requirements in bankruptcy are fulfilled.Having a different focus from governing authorities to ensure the law is followed and not focused only on fees and compensation.Ensuring that when all parties consent and are within the law, they have the legal right to proceed with a sale.Bankruptcy is one of our legal rights and one of the greatest benefits of our financial, legal system. Over time, regulation, process, and interpretation have turned the bankruptcy process into a black hole for creditors and the end of the road for debtors, resulting in a lose-lose for all stakeholders.Is It Time to Fix the Process and Restore the Rights of Debtors and Creditors?We have come a long way since we started on this mission, but there is still a long, long way to go. Today, there is a large portion of the country where trustees will not entertain a “short sale” in bankruptcy even though the trustee has a fiduciary responsibility to administer the sale. Ultimately, the debtors and creditors should have the legal right to request the sale.  Print This Post Demand Propels Home Prices Upward 1 day ago Demand Propels Home Prices Upward 1 day ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Servicers Navigate the Post-Pandemic World 1 day ago Data Provider Black Knight to Acquire Top of Mind 1 day ago Share Save Tagged with: Bankruptcy Bankruptcy Code Brad Geisen Chapter 7 Creditors Foreclosure Brad Geisen, CEO of BK Global, is a 35-year veteran of the default real estate industry and a serial entrepreneur, always focusing on creating smart solutions with better outcomes. He is known for creating online real estate solutions such as,,,,, and many more. He developed and ran a pilot program forHUD, which became the highly effective HUD M&M Program. Geisen created the first online offer management platform, which has become the industry standard used by mortgage servicers and the GSEs. in Daily Dose, Featured, Government, Journal, News Sign up for DS News Daily The Best Markets For Residential Property Investors 2 days ago Is Chapter 7 Bankruptcy Broken?center_img Subscribe The Best Markets For Residential Property Investors 2 days ago Servicers Navigate the Post-Pandemic World 1 day ago 18 days ago 755 Views The Week Ahead: Nearing the Forbearance Exit 2 days ago About Author: Brad Geisen Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Related Articles Data Provider Black Knight to Acquire Top of Mind 1 day ago Previous: Sky’s the Limit for SFR Market  Next: Are Smaller Homes the Cure to Inventory Concerns? Home / Daily Dose / Is Chapter 7 Bankruptcy Broken? Bankruptcy Bankruptcy Code Brad Geisen Chapter 7 Creditors Foreclosure 2021-05-12 Eric C. Pecklast_img read more

Halilhodzic as the New Coach of Japan soon?

first_imgBH football coach Vahid Halilhodzic will soon be set for the coach of Japan, as AP agency reports the writings of Japanese media.As the “Nikan sports“ magazine claims, the Football Association of Japan (JFA) and the 62-year-old Halilhodzic have agreed that he will take the National team, with an annual salary of 2,2 million dollars.The former coach of Japan, Havier Aguire was dismissed on the 4th  February because of his involvement in the match-fixing scandal in Spanish Primera in 2011.It is expect for Halilhodzic to be officially presented as a cocah at the meeting of the   Executive Committee of JFA on 12th March.Last year, Halilhodzic brought the team of Algeria to the knockout phase at the World Cup in Brazil, which is the greatest success if that North African country in the history of their performances at World Cups.(Source: read more

‘The people of the Milford electoral area will be my judge on May 24th’ – Cllr O’Donnell

first_imgEmbattled county councillor John O’Donnell has said he has no intention of resigning and says the electorate of the Milford area will be his judges on local election day on May 24th next.The controversial councillor issued a statement in which he said he was disappointed with the Standards in Public Office Commission’s investigation into an RTE Primetime programme.In the programme, RTE sent an undercover reporter to approach Cllr O’Donnell for support for a bogus windfarm proposal. SIPO claims that Cllr O’Donnell acted incorrectly in his dealings with the bogus businesswoman.Some local councillors have said that Councillor O’Donnell has no option but to resign.However, Cllr O’Donnell stressed that there is no evidence that he sought money in return for lobbying for the bogus windfarm company.He stated “Following the report of the SIPO Commission investigation into my participation in the RTE Primetime Report of December 7th 2015 I wish to express my disappointment with the findings. “SIPO has concluded that I acted incorrectly on a number of counts with regard to the ethics of local government legislation.“I have already apologised for my behaviour in a letter to the Secretary of Donegal County Council on December 9th 2015 for any misunderstanding that may have arisen as a result of the Prime Time broadcast.“I fully exonerated any members of Donegal County Council from any perceived wrong and that it was not my intention to compromise the good name of any colleague, staff or members.”The Kilmacrennan councillor said he wished to repeat that apology in the light of the findings of the SIPO Commission report this week.However, he added that it is important to point out that the SIPO hearing was not about any ‘criminal process’ and as such his record has not been tarnished in serving the people of Donegal within the terms of the Local Government Act. He stressed “There is no evidence whatever that I sought money for any service to the electorate in my role as an elected representative.“I have always acted in the public interest in my role as a Councillor in promoting the development of Donegal and I’ve never sought any benefit from that position.“My role as a businessman is different but at all times I’ve acted strictly in accordance with guidelines and obligations under Part 15 of the Local Government Act and I am satisfied that I have complied with obligations.“I am disappointed that an RTE programme paid for by you, the licences payers was used to ‘set up public representative’ using an undercover reporter, hidden cameras and recording devices. “My position was compromised since there appeared to be a misunderstanding between my role as a businessman and that of a public representative.“While the SIPO Commission has found me guilty on three counts relating to ethics in politics, I wish to make it clear that no evidence emerged from the edited and unedited RTE recordings that I sought any remuneration in my role as a public representative.“The electorate of the Milford area will be the judges of my record on May 24th.”‘The people of the Milford electoral area will be my judge on May 24th’ – Cllr O’Donnell was last modified: March 28th, 2019 by StephenShare this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Reddit (Opens in new window)Click to share on Pocket (Opens in new window)Click to share on Telegram (Opens in new window)Click to share on WhatsApp (Opens in new window)Click to share on Skype (Opens in new window)Click to print (Opens in new window)last_img read more

Smith is made to work for first pro title

first_imgHarrow’s super-featherweight prospect Mitchell Smith won his first professional title but was pushed all the way by underdog Scott Moises at the Copper Box Arena.Former ABA champion Smith, 20, picked up the southern-area belt after coming through the toughest test of his promising career so far.He won a decision by just one point (96-95) following a fiercely competitive 10-round contest at the east London venue.Moises, from Norfolk, showed great spirit and landed with a number of shots but Smith was able to extend his unbeaten record to 7-0.See also:Title would make Smith a happy HammerSmith to defend title at the Copper BoxFollow West London Sport on TwitterFind us on Facebooklast_img read more

Tomorrow Starts Today

first_img Essential Reading! Get my 2nd book: The Lost Art of Closing “In The Lost Art of Closing, Anthony proves that the final commitment can actually be one of the easiest parts of the sales process—if you’ve set it up properly with other commitments that have to happen long before the close. The key is to lead customers through a series of necessary steps designed to prevent a purchase stall.” Buy Now If you don’t know what you were going to do first thing Monday morning, you are beginning the week with a poor start. Because you have not defined your top two or three most important objectives and blocked time to complete them, you are already in reactive mode.Odds are, if you don’t know what you need to do and haven’t defined that work, you will go to the one place that feels like work but isn’t, your email inbox.Working harder doesn’t make you more productive. Neither does working smarter. You can work very hard on things that don’t move you any closer to your goals. That isn’t going to make you any more productive than watching television. You can also spend time trying to hack productive by working smarter. Nothing is gained by applying greater efficiency to activities that aren’t aligned with your goals and objectives.The only thing you can do to increase your productivity in a meaningful way is to do the most important work you need to do each day.If you want greater productivity, you have to do your most important work each day. Being able to do that work is going to require some preparation.First, you are going to have identify your priority. The word “priority” is singular. What is the most important outcome or objective you need to achieve? You no doubt have multiple priorities competing for your time. But before you can decide what is your second most important outcome, you have to decide what is most important. You can make progress on two or three priorities each week, not two dozen.Second, after you know what you need to do, you have to block time to do that work. Your calendar is a reflection of your priorities. A calendar with too much white space means you are working in reactive mode. The world will fill that time for you, if you let it.To keep small things from preventing you from spending time on big things, you have to crowd out small things. Being productive is a matter of focus and discipline.The reason I get up at 4:30 AM every day is so I have two and a half solid hours for my priorities every day. No one wants your time and attention at 4:30 AM. What could you do with 17.5 hours each week?last_img read more

Videos: Florida Created Cool NBA Jam-Style Promos For Tuesday’s ’90s Night Game

first_imgThe Florida Gators mascot performing on the court during a basketball game.NEW ORLEANS, LA – MARCH 26: Albert, the mascot for the Florida Gators, performs during their game against the Butler Bulldogs in the Southeast regional final of the 2011 NCAA men’s basketball tournament at New Orleans Arena on March 26, 2011 in New Orleans, Louisiana. (Photo by Kevin C. Cox/Getty Images)Tomorrow’s Florida-Ole Miss basketball game is “’90s Night” in Gainesville, and the Gators have been posting really cool NBA Jam-style promo clips for the special event on their Instagram page. Between Dorian Finney-Smith jumping off the screen for a huge baseline slam, and Chris Chiozza catching literal fire, these “Gator Jam” videos are pretty awesome.The Gators and Rebels tip off at 9 p.m. We hope Florida has plans to roll a few more of these out before game time.last_img read more