Recently on our legal forum a user asked, “I lost my job six months ago. My wife lost her job last month. We purchased a home two years ago and can no longer make mortgage payments. I thought a short sale might be a great way to get rid of the home. The bank refused to consider a short sale and is now going to foreclose on the home. How can this be better for the bank?”
Although the cost to hire a Chapter 13 bankruptcy attorney can vary by district and state, the good news is bankruptcy courts have guidelines which allow them to review and approve fees. Chapter 13 bankruptcy lawyers also must disclose the fees they charge, and the court has the authority to decide whether or not the fees are unreasonable. In some cases, if the court determines the fees paid have been too high, they will also make the lawyer return all or a portion of the bankruptcy fees.
Although filing bankruptcy has become more socially acceptable, filing bankruptcy does have serious ramifications which can impact a debtor for up to ten years. Recently on our bankruptcy forum a user asked, “If I have only one credit card with a balance on it is bankruptcy right for me?”
Reuters reports Detroit retirees may have been sent ballots with errors earlier this month, which would have allowed them to vote for or against Detroit’s bankruptcy plan to settle approximately $18 billion in debt. The ballot outlined how the city could deal with its public pensions.
It’s costing Detroit a great deal of money to save their city from financial ruin. Reuters reports the cash-strapped city has spent a whopping $36 million in fees and expenses in the last six months. The costs for bankruptcy report filed Tuesday with the federal court-appointed fee examiner lists expenses for a team of lawyers and consultants.
Last week Reuters reported Mt. Gox, once the world’s biggest bitcoin exchange, had decided as part of their bankruptcy plan to liquidate their assets rather than put together a restructured business plan and continue to operate. This week, however, reports indicate there may be some interest from a group of investors to buy Mt. Gox and prevent the liquidation of their assets. As part of the move, the group has launched a website and is now attempting to generate support.
One of the most common questions debtors ask is, “Can I discharge student loans through bankruptcy?” Given that several months ago the Federal Reserve Bank of New York reported for the first time in history the student loan 90 day delinquency rate had moved above 11% and now exceeds $965 billion (which is more than credit card and auto loan debts) there are thousands of students who have this question.
Reuters reports MModal, a medical transcription company, has filed for bankruptcy protection today in efforts to reduce its debt. MModal, which is owned by J.P. Morgan Chase & Co’s private-equity arm, has listed their assets and liabilities in the $500 million to $1 billion range. In 2012, this company was taken private by One Equity Partners in a $1.1 billion all-cash deal.
The bankruptcy judge overseeing Detroit’s bankruptcy has decided that retirees, unions and others opposed to Detroit’s financial bankruptcy repayment plan will have their day in Court. Monday U.S. Bankruptcy Judge Steven Rhodes announced the trial to debate Detroit’s bankruptcy repayment plan will be scheduled for mid-June.
Pension funds and bondholders at odds
In Detroit bankruptcy news this week, Reuters reports Detroit’s bankruptcy repayment schedule outlines a plan to reduce some $18 billion in debt and long-term liabilities by paying the city’s pension funds more than Detroit bondholders. If this is allowed, the bondholder debt would be treated as unsecured debt. If the plan is accepted, the city’s proposed plan would pay pension funds around 25 cents on the dollar, compared with about 22 cents for other unsecured creditors.