Loan Modification, bankruptcy, debt settlement

New Forms for Consumer Bankruptcy

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Simplify Your Life
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Starting in 2008, the Bankruptcy Rules Committee has been working on creating new, “modernized” forms for consumer bankruptcy. Currently, there is one form for everyone from massively large corporations down to the struggling single parent. In an attempt to make things easier and better for the individual person, the Committee has developed these new forms. They are part of the Committee’s report from September 2011. I extracted the pertinent portion: Tab 7, pages 175-315 for easier review. (The full report covering a variety of subjects is a whopping 514 pages long.)

The stated goals of the project are to “improve the official bankruptcy forms and to improve the interface between the forms and available technology.” One of the bulleted criteria is to “streamline the look and feel of the forms, making them inviting and easier to read.” As Katie Porter pointed out in her Credit Slips posting about them, “the new forms are really long—way longer than the current forms as completed in the typical consumer case.”

One wonders how making them so incredibly long fits with the “streamlining” goal.

These are still just draft versions of the forms. More work will no doubt be done before they are presented for public comment. Still, it’s a good idea to give them a look and be prepared to make input when they do come out with the public comment version. The stated intent is to have all the draft forms published for comment in August 2012.

The Committee retained the Center for Clear Communication, Inc. a recognized expert on forms design. Among other things, the Center was involved with very successfully redesigning and simplifying several IRS tax forms. I am a little surprised at the length of the instructions in these forms, but since this is still a draft, maybe that will be corrected.

They do note, on p178 (page 4 of Tab 7), that many comments were made about the length of the forms during testing. They acknowledge the length but point out that in some cases, its due to combining previously single forms and in other cases, new instructions and checklists were added. Since not all forms will need to be filed, the entire package may not be that long. Read the rest of this entry »

One Bank’s Credit Card Collections Down in 2011

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As a sort of interesting addendum to the recent debt validation post, it seems JP Morgan/Chase has stopped taking people to court for delinquent credit card debt.

Chart of JP Morgan Chase credit collections by quarter since 2Q 2009A recent article at American Banker reported that, very quietly, Chase has stopped filing new cases and even laid-off some of its lawyers in Illinois. As the chart to the left indicates, the drop has been fairly pronounced. They collected $405 million in the first quarter of 2011, $321 million in the second quarter, and only $266 million in the third quarter.

Chase is not revealing anything so there is a lot of conjecture in the blogosphere. There is at least some indication that it could be due to poor documentation; somewhat akin to the “robo-signing” scandal for home foreclosures.

And no one knows if this is permanent because Chase has found another way to recoup these monies or if it’s only a temporary slowdown as they investigate and refine their documentation procedures.

A tip of the hat to Credit Slips for pointing to the American Banker article.

Debt Validation a Problem Nationwide

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Merry Christmas or Slavery?
Creative Commons License photo credit: Brad_Chaffee

A recent post on the Bankruptcy Lawyers Blog about the Maryland high court ruling that for all cases filed on or after 1/20/12, debt collectors and creditors must produce real proof that the debtor incurred the debt. There is apparently a nationwide problem with debt collection agencies and similar organizations buying debt in bulk quantities at extremely cheap prices. They then go after the debtors using deceptive practices to try to get them to pay. Many times people don’t know their rights and pay unnecessarily.

There are many requirements a debt collection agency must meet, but many regularly skirt them or fulfill the letter of the law only.

For example, if a debt collection agency contacts you about a debt you supposedly owe, you have the right to request debt validation – proof that you actually owe this debt to the original creditor (not the debt collection agency). That means providing documentation that proves you owe the original creditor the amount the agency is trying to collect. Many times they will not bother as they are looking for quick payments, not a protracted process that will cost them money in the long run.

For a full discussion of what tricks agencies try to pull and the steps you can take to protect yourself, read What is Debt Validation: Make debt collectors provide proof.