The many roads to bankruptcy

bankruptcyThere are many roads that lead to bankruptcy, but ProPublica has been exploring how unpaid parking tickets and automated traffic camera tickets can quickly spiral out of control for the working poor in Chicago. Eager to file bankruptcy to be rid of the burden of unpaid tickets, doing so isn’t always the best solution, because it can lead to some being in worse financial shape. Read some of the personal stories of those who have struggled with mounting debt and bankruptcy at ProPublica.

Podcast: Caught in the bankruptcy feedback loop

Do blacks who file bankruptcy fare as well as whites who do? Not necessarily, according to a report by The Atlantic and ProPublica. Black Americans are “far less likely” than white Americans to have their debts successfully erased — to the benefit of a network of attorneys. The Atlantic has a podcast on the issue, and ProPublica has reporting, as well.

More bankruptcies expected if Obamacare repealed

bankruptcyIf Congress repeals Obamacare without a replacement, leaving millions without healthcare, some expect a rise in the number of bankruptcies. The number of uninsured is predicted to rise between 10 and 30 million people, depending on whether repeal or repeal and replace passes. For those struggling with medical bills already, losing insurance coverage would drive more people into bankruptcy, experts believe. Read more about the dilemma at The Atlantic.

Changes in healthcare could cause more bankruptcies

legal news for consumers

MICRA puts an artificial cap of $250,000 on pain and suffering damages in cases involving medical malpractice.

Unexpected medical expenses are one of the leading causes of bankruptcies in America. One study by the American Medical Association found that 2/3 of bankruptcies cite medical expenses as a major issue. Some are concerned that changes to Obamacare could cause even more bankruptcies. Find out more in this story at Legal Scoops.

Supreme Court sides with truck drivers over bankruptcy case

Truck drivers in New Jersey won a Supreme Court victory Wednesday after the justices ruled that bankruptcy courts can’t allow certain creditors to jump ahead in the repayment line while leaving others empty handed. The trucking company, Jevic Holding Corp., used a technique called “structured dismissal” to make sure lawyers who worked on its Chapter 11 case were paid when truck drivers with the same priority didn’t. Kevin Lessmiller has details in this story from Courthouse News.

US Bankruptcy Court’s ruling could help HashFast trustee recover $1.3 million » Brave New Coin

Last week, Judge Dennis Montali, presiding over the United States Bankruptcy Court for the Northern District of California, ruled that Bitcoin should be classified as “intangible personal property.”

Source: US Bankruptcy Court’s ruling could help HashFast trustee recover $1.3 million » Brave New Coin

Supreme Courts Rule in Favor of Banks in Bankruptcy Protection Lawsuit

In a decision made on Monday by the nation’s highest court, chapter 7 bankruptcy rules have been clarified regarding the inclusion of second mortgages in a debtor’s petition. The Supreme Court ruling (Docket number 13-1421), brought by Bank of America against two Florida homeowners, states that a second mortgage cannot be cancelled in a chapter 7 bankruptcy. The homeowners’ cases argued that since a second mortgage is paid off before the primary mortgage, and that their properties are not worth the value of the primary mortgage amount, that the second mortgage is then valueless.

The two homeowners at the center of the case had each had their second mortgages from Bank of America cancelled in the 11th United States Circuit Court of Appeals. Bank of America appealed the decision and the case found its way to the Supreme Court where the determination was made.

The effects from Monday’s ruling will certainly be seen all over the country as homeowners, looking for financial relief, turn toward chapter 7 as a way to get them back on their financial feet.

Last year, more than 700,000 individuals and couples filed for chapter 7 bankruptcy, the most popular type of consumer bankruptcy, which enables a court-appointed trustee to sell a person’s property to repay debts and then cancel the rest.

About 2.1 million underwater homeowners had second liens at the end of the second quarter of 2014, said lawyers for Bank of America, citing a CoreLogic  report. (Katy Stech, The Wall Street Journal)

Monday’s ruling further clarifies a 1992 ruling from the Supreme Court regarding first mortgages that are “underwater”. The 1992 determination stated that bankrupt homeowners cannot have the lien cancelled under chapter 7 bankruptcy but did not address second mortgages. The last major bankruptcy code overhaul took place in 1978 when second mortgages were much less common.

Source: The Wall Street Journal

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