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Raiding your 401(k). Don’t think of retirement savings as “now” money. It’s moneyyou’ve got to save for later. “Some people use their IRAs, and wind up in bankruptcy,anyway.” Even if you end up having to use it post bankruptcy, it will go a lot further towards survival of your family after bankruptcy; when you are…

1.    Don’t leave out bank, checking, savings, brokerage,   credit union accounts.
2.    Don’t use your credit cards.
3.    Don’t take credit cards cash advances.
4.    Don’t use convenience checks.
5.    Don’t make balance transfers.
6.    Don’t pay debts to family.
7.    Don’t pay debts to friends.
8.    Don’t tell a creditor you intend to pay.
9.    Don’t leave assets of any kind off of your paperwork.
10.  Don’t fail to tell your attorney about your     small business, sole proprietorship,                                   partnership,  LLC, LLP, LC, Corporation or hobby.
11.  Don’t give of gift property to anyone.
12.  Don’t transfer assets to anyone unless it is a genuine sale for fair value.
13.  Don’t cash out retirement plans or 401k’s.
14.  Don’t gamble.
15.  Don’t hide assets or debts.
16.  Don’t forget timeshares or co owned property.
17.  Don’t omit unfiled legal claims you have.
18.  Don’t forget stock options, profit sharing plans, or pension rights.
19.  Don’t take out payday loans.
20.  Don’t put your money in your children’s bank account.
21.  Don’t omit or ‘save” a credit card for after your bankruptcy.
22.  Don’t fail to list debt to family or other “insiders”.
23.  Don’t write bad checks.
24.  Don’t give creditors postdated checks.
25.  Don’t borrow money without talking to your attorney first
26.  Don’t forget to tell your attorney about liens or unpaid judgments on your home.
27.  Don’t make major financial decisions without talking to your attorney.
28.  Don’t misrepresent facts to your attorney.
29.  Don’t bank where you owe money.
30.  Don’t take your name off a title to any asset.
31.  Don’t assume you understand bankruptcy fully, ask your bankruptcy lawyer.

1. Confirm a chapter 11 or chapter 13 plan under §1123 & §1129(a) although both are ride with too many complications to address here.

2. Redeem it.  Special rules apply to certain vehicles but essentially the debtor is entitled to buy the property from the estate at a value determined by the court, Say a debtor owes $29,000 on his dually/diesel pickup he uses personally that he bought more than 910 days prior to filing. The court determines the value is only $17,500.  The debtor can borrow the money from an outside source and keep the truck by paying the creditor $17,500.  The balance is treated as an unsecured loan. Where is
a debtor going to borrow $17,500? There are lenders out there who makes those kinds of loans.

3. Reaffirm the debt, either at the present contract rate and terms (if the debtor cannot do better); or some mutually agreed modification of it.

4. Claim it as exempt. Since secured debt owed on property diminishes the equity the owner has, there is often little that needs to be exempted. Moreover, many debtors are so far upside down in the mortgages on their homes, that they are electing to surrender them, thereby availing themselves larger allowances.

On March 24th, The Supreme Court heard oral arguments in the cases of  Bank of America v. Caulkett and Bank of America v. Toledo-Cardona.

Ever since the 11th Circuit turned Chapter 7 lien stripping on personal residences on its ear, Bank of America has been desperate to get the arguments involved in these cases before the U. S. Supreme Court. The ability to strip unsecured 2nd and 3rd Mortgages from personal residences in Chapter 7 has the potential to help 10’s of thousands of homeowners by reducing the indebtedness on their homes. Chapter 13 has allowed debtors to strip totally unsecured 2nd and 3rd mortgages from their homes for years, thus allowing debtors to retain their homes and provide for their families during harsh economic circumstances.
            
Bank of America argues that the  “Dewsnup”case (which was concerning limiting reduction of a FIRST Mortgage on a debtors home), should apply equally to 2nd and 3rd mortgages, even if the value of the home is LESS  than the amount of the primary mortgage, thereby leaving subsequent mortgages totally unsecured.
            
The 11th Circuit and the homeowners in the cases, argue that since Primary and “Dewsnup” are unaffected by stripping of totally unsecured secondary mortgages, the same logic should apply to Chapter 7 debtors that allows Chapter 13 debtors to strip secondary mortgages.       In reading the transcript from oral argument, it seems clear, that even a divided court was having difficulty finding Bank of America’s argument compelling.
            
At one point the conversation went off course when Justice Breyer expressed concern about business and commercial secondary financing having disproportionate impacts compared to residential mortgages because of the much larger size of these loans. However “Dewsnup” refers to PRIMARY mortgages on residences. Investment properties are not affected by “Dewsnup” because they can be stripped to value anyway. Justice Scalia, who dissented in “Dewsnup”, would clearly overturn “Dewsnup.”
            
In reality, “Dewsnup” would probably not be an issue today but for the collapse in real estate values, partially brought on by the race between lenders to capture as much of the higher interest rates secondary mortgage financing yields; a feeding frenzy brought on by illusionary increases in value fed by an overheated real estate market. Lenders never considered that real estate values could go down, let alone collapse. The race for higher profits seems to have diminished the “superior expertise” of the experts!
            
The major lender’s (Bank of America included) have had their bail outs. “HAMP” and “HAMP 2” have been largely ineffective for the majority of people applying for relief through those programs. Even though lenders were supposed to apply the programs in good faith, it has not been until lenders realized even they could not support owning every home via foreclosure that better results are starting to happen.

It could also be that bringing the programs into the oversight programs developed in Bankruptcy Court has also had a major hand in producing better results. In the Southern and Middle Districts of Florida, the success rate in Bankruptcy Court for obtaining modifications has been a resounding 72-82% success ratenas opposed to the unsupervised efforts by lenders of just 4% success nationwide. Regardless of these numbers, strapped homeowners may get their “bailout” with the coming decision. The pendulum may just start swinging the other way.