Included in the 2 trillion dollar Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a provision that allows homeowners with government guaranteed loans (Fannie Mae and Freddie Mac) to request up to 12 months of mortgage payment forbearance. Under the CARES Act  a homeowner may ask for 6 months of loan payment forbearance that is renewable for another 6 months. In other words, a qualified homeowner can go an entire year…

  The unfolding of the COVID-19 virus episode has been the weirdest experience in my lifetime. I remember the courthouse bombing by Timothy McVeigh in Oklahoma City and commercial jets hitting the Twin Towers on 9/11, but those were one day events. The corona virus is different because it continues from day to day and all of us are potential victims. You see young people dying on breathing machines and you realize your family is…

Below is a letter written by a 64-year old bankruptcy attorney to the United States Trustee, the agency that oversees bankruptcy cases. Clifford J. White III, Director Executive Office for U.S. Trustees Re: Covid-19 and consumer bankruptcy practice Dear Director White: On behalf of our NACBA membership and our entire NACBA Board of Directors, I am writing to you to suggest immediate (and hopefully temporary) remedial actions regarding the administration of Ch. 7 and Ch.…

At first glance it appeared that the debtor had a “slam dunk” case to receive a hardship discharge of her $140,000 student loan debt. The debtor is a 36-year-old single mother of two disabled children, ages 11 and 12. She received no child support since her ex-husband voluntarily terminated his parental rights. She could not afford her own apartment and lived with her parents. She earned a $36,000 annual salary and did not expect any…

  Lower-income debtors simply cannot afford the high cost of filing chapter 7, and that is a real problem when garnishments strike. The cost of filing Chapter 7 in Nebraska ranges from $1,300 to $1,800 and ALL of those fees must be paid in full to file a case. How can low-income debtors stop garnishments if they cannot afford the fee? Many debtors have no choice but to file a chapter 13 case which can…

The ironic feature of the bankruptcy system is that a debtor must come up with a lot of money to file a case.  Indeed, it costs a lot of money to go broke! According to bankruptcy law professors  Pamela Foohey, Robert M. Lawless, Katherine Porter (now Congresswomen Katie Porter), and sociology professor  Deborah Thorne in their 2017 article No Money Down Bankruptcy, the high cost of filing chapter 7 bankruptcy is…

The 8th Circuit Court of Appeals has affirmed a Bankruptcy Appellate Panel’s opinion regarding whether a retirement account awarded to a spouse in a divorce case is exempt in a bankruptcy proceeding. Last year the BAP court ruled that a retirement account awarded in a divorce case was not earned by the debtor and was therefore not protected in a bankruptcy case under federal exemption laws.  (See Lerbakken decision 2019). This opinion came as a…