According to news articles posted in June of 2010, the U.S. Trustee Program (USTP) successfully resolved litigation against Countrywide Home Loans Inc. in its ongoing efforts to protect homeowners in bankruptcy in the state of Kansas. Over a two-year period, the USTP worked closely with the Federal Trade Commission (FTC) to carry out parallel investigations relating to Countrywide’s improper conduct in servicing home loans. Clifford White, Director of the Executive Office for U.S. Trustees, was quoted as saying. “Homeowners who file for bankruptcy protection and obey the rules are entitled to a fresh start. Today’s agreement among the FTC, USTP, and Countrywide helps to ensure that debtors receive the relief to which they are legally entitled. The agreement will compensate homeowners in bankruptcy who were victimized by Countrywide’s improper business practices, and will help prevent future harm to homeowners in dire financial straits who legitimately seek bankruptcy protection.”
The number of Americans filing for personal bankruptcy rose by nearly a third in 2009, a surge largely driven by foreclosures and job losses. Overall, personal bankruptcy filings hit 1.41 million last year, up 32% from 2008, according to the National Bankruptcy Research Center. Chapter 7 filings were up more than 42% as of November 2009, compared with the same period a year earlier. November is the most recent month with analyzed data available. Chapter 13 filings rose by 12% and made up less than a third of 2009 filings as of November. The Chapter 7 increases in filings are especially significant because a “means” test was introduced in 2005 in order to force people toward a Chapter 13 so they would still have to pay back a portion of their debts. Instead, the worst US recession in four decades is testing the effectiveness of the “means” test laws.
The housing crisis and high unemployment rate in this recession have prompted more people to file for bankruptcy who never have considered the possibility than ever before. More middle-class Americans, people with high incomes, and people with higher education levels have resorted to bankruptcy filings. Bankruptcies are happening to famous people, rich people, poor people, infamous people, and people all between because bankruptcy is no respecter of persons or standings in society. Bankruptcy can happen to anyone at anytime. It can happen to you.
Bankruptcy laws originated from Congress which was given the power to legislate them from the Constitution of the United States. This makes bankruptcy law primarily federal in nature, but the states have passed bankruptcy laws to clarify the federal statues and fill in the missing pieces. The laws were designed to protect both the creditor and the debtor, and they were particularly designed to provide an honest person with a chance to work their way out of a bad financial situation, providing a fresh new start. It is not a surprise to me to see that the Federal Government stepped in to protect the debtors from the unsavory actions of Countrywide Homes mortgage company. As a society, we have come a long way since the days of the debtor prisons and states.
The moment you file a bankruptcy, a judge will order all collecting actions to cease, an important feature called the automatic stay. The automatic stay, applicable to all types of bankruptcy filings, means that the mere request for bankruptcy protection automatically stops and brings to a cessation certain lawsuits, foreclosures, utility shut-offs, evictions, repossessions, garnishments, attachments, and debt collection harassment. That means all creditors will have to go through a trustee in order to get any of their claims back. So, if you have gotten a foreclosure notice, and you want it to cease, filing a chapter 13 will immediately stop the process. Certainly, these fact may have prompted the actions taken by Countrywide.
If you have found yourself in a situation where you cannot reduce your debt within a five year period, you may be a candidate for filing a bankruptcy, and you are entitled to a fresh start. Nevertheless, choosing the appropriate bankruptcy to file can be a complicated and tricky process. Common sense indicates you will need a bankruptcy lawyer in order to properly understand how complex bankruptcy laws may apply in your situation. If you determine you are in need of relief from the stress associated with debt, and you live in or around the metropolitan area of Wichita, Kansas, contact us today and we will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.
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