Fresh Start South Carolina

Any attorney representing a debtor in a case under this title, or in connection with such a case, whether or not such attorney applies for compensation under this title, shall file with the court a statement of the compensation paid or agreed to be paid, if such payment or agreement was made after one year before the date of the filing of the petition, for services rendered or to be rendered in contemplation of or in connection with the case by such attorney, and the source of such compensation.”  11 USC § 329“

 (4)(A) Except as provided in subparagraph (B), the court shall not allow compensation for—

(i) unnecessary duplication of services; or
(ii) services that were not—

(I) reasonably likely to benefit the debtor’s estate; or
(II) necessary to the administration of the case.  11 USC § 330 (4)(A)“

Employing Other Professionals: Motion-to-Employ-In-re-Overstreet-07-05397-jw

Removal under 28 USC § 1452 of a claim or cause of action from state court to federal district court if you have a bankruptcy in the district court.

Rule 7000, et. seq.

An adversary proceeding is governed by the rules of this Part VII. It is a proceeding

(1) to recover money or property, except a proceeding to compel the debtor to deliver property to the trustee, or a proceeding under § 554(b) or § 725 of the Code, Rule 2017, or Rule 6002,

(2) to determine the validity, priority, or extent of a lien or other interest in property, other than a proceeding under Rule 4003(d),

(3) to obtain approval pursuant to § 363(h) for the sale of both the interest of the estate and of a co-owner in property,

(4) to object to or revoke a discharge,

(5) to revoke an order of confirmation of a chapter 11, chapter 12, or chapter 13 plan,

(6) to determine the dischargeability of a debt,

(7) to obtain an injunction or other equitable relief,

(8) to subordinate any allowed claim or interest, except when subordination is provided in a chapter 9, 11, 12, or 13 plan,

(9) to obtain a declaratory judgment relating to any of the foregoing, or

(10) to determine a claim or cause of action removed pursuant to 28 U.S.C. § 1452.”

IN-RE-ANGELO-DIVITTORIO-DEBTOR 
Removal, Adversary Proceedings, Lender Disclosures, Time Barred Predatory Lending Claims

Class Action Against Clayton Homes for Fraudulent Charges
Removed to District Court (not Bankruptcy Court) but remanded back to state court.

http://www.scconsumer.gov/legal/predatory_lending.htm

SC Code Ann. Section 37-23-20

(9)    ‘High-cost home loan’ means a loan, other than an open-end credit plan or a reverse mortgage transaction, in which the: 

(a)    principal amount of the loan does not exceed the conforming loan size limit for a single-family dwelling as established from time to time by the Federal National Mortgage Association;

(b)    borrower is a natural person;

(c)    debt is incurred by the borrower primarily for personal, family, or household purposes;

(d)    loan is secured by either:

(i)    a security interest in a residential manufactured home, as defined in Section 37-1-301(24) which is to be occupied by the borrower as the borrower’s principal dwelling; or

(ii)    a mortgage on real estate upon which there is located or there is to be located a structure designed principally for occupancy of from one to four families and which is or is to be occupied by the borrower as the borrower’s principal dwelling; and

(e)    terms of the loan exceed one or more of the threshold as defined in item (15) of this section.

(15)    ‘Threshold’ means either (A) or (B) in a loan transaction, whichever is applicable:

(A)    without regard to whether the loan transaction is a ‘residential mortgage transaction’ as the term ‘residential mortgage transaction’ is defined in Section 226.2(a)(24) of Title 12 of the Code of Federal Regulations, as amended, the annual percentage rate of the loan at the time the loan is consummated is such a rate that the loan is considered to be a ‘mortgage’ pursuant to Section 152 of the Home Ownership and Equity Protection Act of 1994 (Pub. Law 103-25, [15 U.S.C. Section 1602(aa)]), as amended, and regulations adopted pursuant to it by the Federal Reserve Board, including Section 226.32 of Title 12 of the Code of Federal Regulations, as amended, except with regard to a mortgage or loan secured by a nonreal estate manufactured housing lien, the term ‘threshold’ means the annual percentage rate of the nonreal estate secured manufactured housing lien at the time the mortgage or loan is consummated exceeds by more than ten percentage points the yield on United States Treasury securities having comparable periods of maturity as of the fifteenth day of the month immediately preceding the month in which the application of the extension of credit is received by the lender;

(B)    the total points and fees payable by the borrower at or before the loan closing exceed:

(i)    five percent of the total loan amount if the total loan amount is twenty thousand dollars or more;

(ii)    the lesser of eight percent of the total loan amount or one thousand dollars if the total loan amount is less than twenty thousand dollars; or

(iii)    three percent of the total loan amount for nonreal estate secured manufactured housing transactions if the total loan amount in the nonreal estate secured housing transaction is twenty thousand dollars or more;

(i)    up to and including two conventional conforming discount points payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan’s interest rate is discounted does not exceed by more than one percentage point the required net yield for a ninety-day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater; or

(ii)    up to and including one conventional conforming discount point payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan’s interest rate is discounted does not exceed by more than two percentage points the required net yield for a ninety-day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater;

Section 37-23-30.    A high-cost home loan agreement may not contain:

(1)    a call provision that permits the lender, in its sole discretion, to accelerate the indebtedness. This item does not apply when repayment of the loan is accelerated by default, or pursuant to a due-on-sale provision, or some other provision of the loan documents unrelated to the payment schedule;

(2)    a balloon payment provision that contains a scheduled payment more than twice as large as the average of earlier scheduled payments. This provision does not apply when the payment schedule is adjusted to the seasonal or irregular income of the borrower;

(3)    a negative amortization provision with a periodic payment schedule that causes the principal balance to increase;

(4)    a provision that increases the interest rate after default. This provision does not apply to interest rate changes in a variable rate loan otherwise consistent with the provisions of the loan documents, so long as the change in the interest rate is not triggered by the event of default or the acceleration of the indebtedness;

(5)    terms under which more than two periodic payments required pursuant to the loan are consolidated and paid in advance from the loan proceeds provided to the borrower;

(6)    charges to a borrower for fees to modify, renew, extend, or amend a high-cost home loan or to defer a payment due pursuant to the terms of a high-cost home loan; or

(7)    contain as a part of the loan agreement a choice of law provision identifying a state other than South Carolina, unless otherwise allowed under federal law.

Section 37-23-40.    The lender of a high-cost home loan may not:

(1)    make a high-cost home loan without first receiving a written certification from a counselor approved by the State Housing Finance and Development Authority that the borrower has received counseling on the advisability of the loan transaction and the appropriate loan for the borrower. The Department of Consumer Affairs shall specify the information that must be provided by the lender and reviewed by the consumer credit counselor;

(2)    make a high-cost home loan unless the lender reasonably believes at the time the loan is consummated that one or more of the obligors, when considered individually or collectively, is able to make the scheduled payments to repay the obligation based upon a consideration of their current and expected income, current obligations, employment status, and other financial resources other than the borrower’s equity in the dwelling that secures repayment of the loan. An obligor is presumed to be able to make the scheduled payments to repay the obligation if, at the time the loan is consummated, the obligor’s total monthly debts, including amounts owed pursuant to the loan, do not exceed fifty percent of the obligor’s monthly gross income as verified by the credit application, the obligor’s financial statement, a credit report, financial information provided to the lender by or on behalf of the obligor, or another authoritative means. A presumption of inability to make the scheduled payments to repay the obligation does not arise solely from the fact that, at the time the loan is consummated, the obligor’s total monthly debts, including amounts owed under the loan, exceed fifty percent of the obligor’s monthly gross income;

(3)    directly or indirectly finance:

(a)    prepayment fees or penalties payable by the borrower in a refinancing transaction if the lender or an affiliate of the lender is the noteholder of the note being refinanced;

(b)    points and fees exceeding two and one-half percent of the total loan amount;

(4)    charge a borrower points and fees in connection with a high-cost home loan if the proceeds of the high-cost home loan are used to refinance an existing high-cost home loan held by the same lender as noteholder; or

(5)    pay a contractor pursuant to a home improvement contract from the proceeds of a high-cost home loan other than:

(a)    by an instrument payable jointly to the borrower and the contractor; or

(b)    at the election of the borrower, through a third-party escrow agent in accordance with terms established in a written agreement signed by the borrower, the lender, and the contractor before the disbursement.”

Click here to read entire bill.

Discharge

A discharge in bankruptcy voids judgments and personal liability with respect to any debt discharged.  Discharge prevents any future collection process.  In bankruptcy you may discharge most unsecured debts, including medical bills.   You may discharge all of your unsecured debts in a Chapter 7 liquidation or you may discharge a significant portion of your unsecured debts in a Chapter 13 plan.  There are exceptions to debts that can be discharged, such as student loans (A hardship discharge is possible.  Case: StudentLoan-Hardship-Denied; Hardship-Granted), certain tax obligations, and domestic support obligations.  “Unsecured” means that the debt is not “secured” by an interest in property.  A creditor that is secured by an interest in property has a lien on the property.

Liens

Generally, liens are not dischargeable in bankruptcy.  However, some liens (judgment liens and mechanics liens) may be voided by the court, which makes them unsecured debt.  Most liens may be modified in bankruptcy.  This means that the bankruptcy court may modify the payment on your primary vehicle so that your monthly expenses are made more manageable.  This ability to modify liens is especially valuable to small businesses that have liens on equipment or inventory.  Although a Chapter 13 plan provides the opportunity to keep property that you are using and that you need to truly have a fresh start, it does not mean that you can keep all property that has a lien on it.

Cases On Liens:

• stripping-second-lien
• NoProp-NoLien

If the property is more burdensome than useful, the trustee may abandon the property to the creditor.  Or if you cannot provide for payment in full during your repayment period then you may have to surrender the property.  This is a fine line because if you could afford a very large payment for property then you will not qualify for bankruptcy protection!  The practical result is that in a Chapter 13 you get to keep personal goods and business tools that you would have to sell in a Chapter 7, but you may not get to keep property that has a lien on it and is not truly necessary to your fresh start.

Home Mortgages

The bankruptcy court cannot order banks to rework home mortgages, however, there is pressure from Congress on banks to work with debtors to make home mortgages more manageable.

Please spend a moment at the following site.  http://makinghomeaffordable.gov

If you are in bankruptcy, court approval is required.  Your attorney can provide the court with a consent order to modify your home mortgage that reflects an agreement between you and your bank.  The court will approve of the order if the order provides the following:

• There is no extension of additional funds beyond what is already owed;
• Payments to other lien holders under the plan will not be affected;
• The proposed modification has no detrimental effect on other creditors;
• The proposal is in the best interest of the debtor and the estate; and
• Whether payment to the creditor will continue or terminate.

Past Due Amounts (Arrearage)

You must pay all past due amounts in your Chapter 13 or Chapter 11 plan if you are not going to surrender the property.   However, the Bankruptcy Petition stops all fees and the past due amount is repaid at a 0% interest rate.

If your property has been reposessed you may be able to recover it within the bankruptcy process.

A debtor may seek turnover of property to the estate of the bankruptcy by: written notification to the creditor regarding the existence of the bankruptcy; a written demand for turnover of the collateral, and the submission of proof of insurance to show that the creditor’s interest in the collateral is protected.  Click here for a South Carolina case explaining turnover.

After filing of a bankruptcy petition  § 542 provides the basis for turnover or return of property of the estate. n re Abrams, 127 B.R. 239, 243 (9th Cir.BAP 1991).  “The commencement of a case under § 1301 creates an estate which ‘is composed of all the following property, wherever located and by whomever held: (1) . . . all legal or equitable interests of the debtor as of the commencement of the case.’” Johnson v. All American Title Loans (In re Johnson), 99-05021-D, A/P No. 99-80316-D, slip op. at 3 (Bankr. D.S.C. February 11, 2000). Furthermore, “because a debtor in a Chapter 13 case exercises identical rights and powers relating to the use, sale, and lease of property of the estate as does a trustee, the property of the estate should be turned over to the debtor. Id. (citing 5 Collier on Bankruptcy ¶ 1303.01 (Lawrence P. King, et al. 15th ed.)).”

Businesses may wish to set up a receiver.  Read here for more on this option.

If you are facing residential foreclosure, in South Carolina, right now you have options before bankruptcy and in bankruptcy.

IN BANKRUPTCY you can negotiate your home mortgage and actions against your home are suspended by the automatic stay.  However, the bankruptcy court cannot order banks to rework home mortgages, however, there is pressure from Congress on banks to work with debtors to make home mortgages more manageable. Please spend a moment at the following site.  http://makinghomeaffordable.gov

WHEN YOU NEGOTIATE YOUR MORTGAGE IN BANKRUPTCY, court approval is required.  Your attorney can provide the court with a consent order to modify your home mortgage that reflects an agreement between you and your bank.  The court willl approve of the order if the order provides the following:

• There is no extension of additional funds beyond what is already owed;
• Payments to other lien holders under the plan will not be affected;
• The proposed modification has no detrimental effect on other creditors;
• The proposal is in the best interest of the debtor and the estate; and
• Whether payment to the creditor will continue or terminate.

BEFORE BANKRUPTCY.   There are defenses and counterclaims that can slow down the foreclosure action.  If income can be established during the slow down, the home can be saved.  See this presentation from South Carolina Legal Services:

http://www.scconsumer.gov/licensing/credit_counseling/Foreclosures%20in%20South%20Carolina.pdf

Defenses, e.g., Failure of Notice of Default and Intent to Accelerate; No HUD Counseling Notice (National Housing Act, 12 U.S.C. 1701x(c)(5)); Failure to Comply With Statutory and Contractual Condition Precedent to Foreclosure (failure to comply with the federal regulations); Failure to Comply With Applicable Pooling and Servicing Agreement Loan Servicing Requirements (filed with the Securities and Exchange Commission);  Illegal Charges Added to Balance; Failure of Good Faith and Fair Dealing; Unclean Hands / Estoppel; Failure to State a Cause of Action; Plaintiff Does Not Have Standing, Plaintiff is not a Real Party in Interest;

Additionally, South Carolina requires some banks to attempt a loan modification.  See this Article for a complete discussion.
For more in-depth information see the following: 2009-05-22-01

The Home Affordable Refinance Program and the Home Affordable Modification Program offer options for home owners suffering the effects of abusive lending.

The Refinance program applies to loans owned by Freddie Mae and Fanni Mac.
Participants in the Modification program may be found by clicking here. To reduce your monthly payments you must make sure that your lender offers a reduced rate, a longer payment term, or/and a reduction in the principal.

Other important information, for example the monthly payments, interests, taxes and insurance cannot be greater than 31% of your gross monthy income; the interest rate may be reduced to 2%; the interest may be fixed permanently; the term may be extended to 40 years; and the principal may be deferred is available by clicking here.

In South Carolina Administrative Order 2009-22-01-1 will also allow an individual in foreclosure to challenge its lender’s assertion that the Home Affordable program does not require a modification in his or her foreclosure case.

Sources:  ,

Katie McElveen; Richardson, Patrick; Westbrook & Brickman, LLC, Mt. Pleasant; Mark Fessler; S.C. Legal Services, Greenville, Foreclosures and Loan Modifications: Stopping the Flood After the Storm, 2 South Carolina Young Lawyer 10 (Feb. 2010).  See also

http://www.freddiemac.com/news/pdf/interventions_in_mortgage_default.pdf; https://www.hmpadmin.com//portal/programs/directives.html.

Other possible remedies suggested in the South Carolina Young Lawyer: Truth in Lending Act, the Real Estate Settlement Procedures Act, the South Carolina Unfair Trade Practices Act, the South Carolina Consumer Protection Code, breach of contract and the implied coventant of good faith and fair dealing, fraudulent omissions, fraudulent concealment, etc.