Comments on: Flipping flops http://polizeros.com/2007/02/27/flipping-flops/ Musings on politics: anti-war, global warming, peak oil and otherwise Tue, 02 Dec 2008 00:30:13 +0000 http://wordpress.org/?v=2.6.1 By: Joe Hartley http://polizeros.com/2007/02/27/flipping-flops/#comment-89285 Joe Hartley Tue, 27 Feb 2007 16:00:07 +0000 http://polizeros.com/2007/02/27/flipping-flops/#comment-89285 I don't see how the bankruptcy system is implicated unless the debtor files. BK laws shouldn't be preempting local laws governing secured transactions, and the laws in California and most states prevent what you're suggesting (i.e., no difficiency judgment against the debtor when the lender forecloses on the security). There can be tax implications, of course, but there's nothing new in that. So I'm still at a loss to see where the problem is unless the homeowner has other debts and has sought BK protection. I don’t see how the bankruptcy system is implicated unless the debtor files. BK laws shouldn’t be preempting local laws governing secured transactions, and the laws in California and most states prevent what you’re suggesting (i.e., no difficiency judgment against the debtor when the lender forecloses on the security). There can be tax implications, of course, but there’s nothing new in that. So I’m still at a loss to see where the problem is unless the homeowner has other debts and has sought BK protection.

]]> By: Bob Morris http://polizeros.com/2007/02/27/flipping-flops/#comment-89160 Bob Morris Tue, 27 Feb 2007 12:44:13 +0000 http://polizeros.com/2007/02/27/flipping-flops/#comment-89160 Two NY Times articles <a href="http://www.nytimes.com/2005/08/21/national/21bankruptcy.html?ex=1282276800&en=6665933f8acce338&ei=5089&partner=rssyahoo&emc=rss ">1</a> Under the revised law, debtors who earn more than the median income in their state and who can repay at least $6,000 of their debt over five years will no longer be able to have their debts wiped out for a fresh start under the more generous provisions of Chapter 7 of the bankruptcy code. Instead, they will have to seek protection under Chapter 13, which requires a repayment schedule. <a href="http://www.nytimes.com/2005/09/27/business/27bankrupt.html?pagewanted=2&ei=5070&en=0ffe5723d81ec870&ex=1172725200&adxnnl=1&adxnnlx=1172579644-zVoSkUON+ADMSHEZD49h8w ">2</a> [The new law] requires debtors to provide an estimate of their income by taking an average of their most recent six months' earnings before they can file under Chapter 7. Debtors with higher incomes are to be kept in bankruptcy status for several years, to pay off their debts. The new law also requires every individual to undergo credit counseling before filing for bankruptcy protection. "It's not right to make people who lost everything go through a course about how to manage their finances," Mr. Botes said. The law has stiffer requirements as well for what records must be produced by the debtor. Two NY Times articles

1

Under the revised law, debtors who earn more than the median income in their state and who can repay at least $6,000 of their debt over five years will no longer be able to have their debts wiped out for a fresh start under the more generous provisions of Chapter 7 of the bankruptcy code. Instead, they will have to seek protection under Chapter 13, which requires a repayment schedule.

2

[The new law] requires debtors to provide an estimate of their income by taking an average of their most recent six months’ earnings before they can file under Chapter 7. Debtors with higher incomes are to be kept in bankruptcy status for several years, to pay off their debts.

The new law also requires every individual to undergo credit counseling before filing for bankruptcy protection. “It’s not right to make people who lost everything go through a course about how to manage their finances,” Mr. Botes said.

The law has stiffer requirements as well for what records must be produced by the debtor.

]]> By: Bob Morris http://polizeros.com/2007/02/27/flipping-flops/#comment-89152 Bob Morris Tue, 27 Feb 2007 12:24:05 +0000 http://polizeros.com/2007/02/27/flipping-flops/#comment-89152 Under the new bk laws, if a homeowner loses their home and say the bank sells it for a 100k loss, they can come after the former owner for the rest. So no, the foreclosure does not necessarily wipe out the debt. Plus, the new laws make it much harder to do a bk. It's not a given that you can do it. The IRS can also treat the difference between the buy and sell price (even if the sell is less) in a foreclosure as income and thus it is taxable. Under the new bk laws, if a homeowner loses their home and say the bank sells it for a 100k loss, they can come after the former owner for the rest. So no, the foreclosure does not necessarily wipe out the debt.

Plus, the new laws make it much harder to do a bk. It’s not a given that you can do it.

The IRS can also treat the difference between the buy and sell price (even if the sell is less) in a foreclosure as income and thus it is taxable.

]]> By: Joe Hartley http://polizeros.com/2007/02/27/flipping-flops/#comment-88852 Joe Hartley Tue, 27 Feb 2007 05:53:59 +0000 http://polizeros.com/2007/02/27/flipping-flops/#comment-88852 Absent a judicial foreclosure, I don't see how the change in the BK laws come into play. As a lender you either get your money from the security or you get it from the debtor, but not both. Every creditor always goes for the property, which the debtor loses, but the foreclosure wipes out the debt. Or did I miss something when I blinked? Absent a judicial foreclosure, I don’t see how the change in the BK laws come into play. As a lender you either get your money from the security or you get it from the debtor, but not both. Every creditor always goes for the property, which the debtor loses, but the foreclosure wipes out the debt.

Or did I miss something when I blinked?

]]> By: House Builders » House Builders February 27, 2007 12:47 am http://polizeros.com/2007/02/27/flipping-flops/#comment-88849 House Builders » House Builders February 27, 2007 12:47 am Tue, 27 Feb 2007 05:51:09 +0000 http://polizeros.com/2007/02/27/flipping-flops/#comment-88849 [...] Blog Posts Flipping flops Newman of flipping is losing another house. The currently imploding real estate market in formerly [...] [...] Blog Posts Flipping flops Newman of flipping is losing another house. The currently imploding real estate market in formerly [...]

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