a Nut in A Nutshell

yeah

2011-12-28T14:50:00.001-08:00

It's hard to believe, but the ranch has come to a close, and I'm home. I may be shipping off to Colorado on Saturday (I really hope not), but I'm here for all of today. Such a long time. The ranch though. Tuesday and most of Wednesday were fun-filled days of excitement where I laid in a bed with a raging fever. It lasted EXACTLY twenty-four hours, convincing me that diseases have some sort of evil consciousness. I can see them in their war room, cackling and planning. "What time period of sickness would be most annoying?" asks one. "A full twenty-four hours!" shouts another. "Here here!" The room erupts in a jubilee as my immune system acts up. It really sucked is what I'm getting at.

Yesterday, after all the little devi- er, campers were gone, we worked hard to clean up the ranch so we could go home. We got everything done in record time, and here I am to prove it. I wanted to head home so badly though, it was the overriding thought and kept me bogged down as I helped out. When I finally left and headed for home though, talking with Dolan brought to mind all of the positive experiences I'd had and lessons I had learned, and all the people that I was going to miss. This summer was grueling, but I learned so much from it, and I can only hope that the lessons stay with me. I'm a really happy person right now, and I'm really committing myself to becoming Jeff 2.0 (new and improved, with tons of new features!) as fast as I can. Gotta love BCSR.

2011-11-28T14:51:00.000-08:00

Weren't expecting a post from me, were you? First I feint by saying I'm going down to Birch Creek, but then the sudden jab comes from nowhere, landing a direct hit on another post! Actually, this turn of events was completely unforeseen, but here I am, leaving again at one. Before that story though, I have another to tell you.

Normally I take my days off on Thursdays, but this week we did our three day hike, spanning from Thursday to Saturday. These hikes are normally one of the highlights of the ranch, taking place in beautiful desert environment that puts even the Havasupai hike to shame. Coyote Gulch and Death Hollow, our two normal destinations, were hit with severe flash flood warnings, putting a bit of a damper on going there. Sure, they're great hikes, but death probably isn't worth going. Instead, we loaded up the boys and shipped them off to the San Rafael river. In any other conditions, I'm sure this would have been a spectacular hike. Absolutely amazing. The only problem was that the entire way there, rain was falling from vicious black clouds. Luckily, the canyon's wide enough to avoid flash flooding, but the entirety of the hike becomes thick, thick, molasses mud. My Chacos were caked in the stuff by the end and weighed at least three pounds a piece. I didn't mind the hike at first though. Sure, we had to cross some slightly muddy rivers and trudge through mud, but it wasn't that bad. Even falling down the surprise Jeff's-leg-wide four-foot-deep-hole didn't darken my spirits. I was hiking, baby! Then I got trapped behind Jackson Sanders. Jackson is an interesting kid. At twelve years old, immaturity still has a strong hold on him. He stays in his room all day and plays with legos and makes stop-motion movies. That sounds pretty cool, but he has some strange fascination with mythical creatures in fantasy stories he listens to on books-on-tape. Still, he could be a normal twelve year old. He's not. His brother, Jeff Sanders, is at the ranch too, and Jackson feels some abject need to be with him all the time. It's almost magnetic. Jeff doesn't really care too much, but Jackson is always with him. Or the ranch's vicious cat. The kid acts like he's eight, and an abnormally self-centered eight-year-old at that. He also happens to be the slowest hiker in the entire existence of everything. I asked him if he could walk faster, because I know for a fact that he could have, and he responded verbatim that he was focusing on walking faster (he wasn't) and asking him would only make him angrier. At this point, I was starting to get angry. And I really don't visibly get angry at people. Not good news. After all, we had been taking the wrong trail for two hours, only to have two other counselors catch up with us (long story) ten minutes after they had started, and now there was this slow-walking, complaining kid who refused to like anything about the ranch. To round the package off, I had forgotten to pack a cup and spoon to cook ramen and oatmeal in, and we camped in a patch of cow pies because it was the only place with an overhang not suffocated with mud. My mood lifted later that night after me, Dolan, and Chris, a camper, had a good conversation, followed by a good dream.

Bam! Sun's up, time to move! Praying feebly to the powers that be, I asked that please, please let there be no mud. I'm begging you. The river had indeed lost its chocolate milk appearance and consistency, but gave way to my old enemy mudder. Mudder is water mixed with equal parts mud, meaning that every time you cross it, mud attaches itself to you like CNN to Obama. Impossible to wash out, since there's no clean water, it also starts to dry and harden if you're out of the river too long, making hiking an absolute blast. Sarcasm, by the way. Halfway through the day's journey, we found Virgin Springs. Sort of. I don't really understand what happened, but there was no spring where we were. There was however, a non-silty pond to swim in and wash off in, and a good place to eat lunch and pump clean water. Below though, was where the fun was. At the river, we threw off our packs and shirts and jumped in the water. Screw mud! Immediately inside the water, a miraculous discovery was made. Mud makes you float! Sure, you couldn't drink it, but the river's buoyancy gave the Dead Sea a run for its money. The water was impossible to drown in, even if you tried. No matter what, you were thrown upwards with no effort at all. We had float races galore, and started soaring down this river, laughing till my gut hurt because every so often, a rock came up out of nowhere and landed a hard smack on your butt. The water was so muddy, you could catch fish while you were floating too. One counselor raised his hand and said bewilderedly, 'Hey guys, I caught a fish.' Fish weren't the only blind swimmers. Crawdads covered the banks in unbelievable numbers, climbing their way up hills to some sort of sermon on the mud. Easy pickings for teen boys, they landed in tin cans before they knew what was happening. The fun lasted until we camped again that night, when one of the boys developed a fever of over 100. Crap. We failed at building a shelter for him, thanks largely to our main support beam snapping halfway through construction, but he had fallen asleep by that time. He woke up feeling fine, but it's harder to sleep than you'd think knowing he might wake up with a critical fever and five miles left to hike. To complement the pit in my stomach, it rained that night. Not too hard, thank goodness, but it was like nature was sticking its tongue out at us.

Yesterday we packed out to find that, to no one's surprise, the other group wasn't at the rendezvous point. We expeditioned our way through more mud, this time in a car, and found no one. We took a truck we had left there to save the counselors there the trouble of driving it and went back. Enoch and Dolan stayed at the rendezvous point while everybody else left. Thank you so much, guys. I was dead tired and wanted to shower more than I have in my entire life. Back at the ranch past five, much later than when we had arrived, we finally heard from the other group. They had taken a wrong trail also and were an hour away by car. Well, at least they were safe. Then Adam asked me if I wanted to take Jose to the airport that night. Jose, a camper, is from New York, and had a flight this morning at 12:01. I said heck yes, free gas, and a nice mattress to boot. Only problem we had was that Jose had personal belongings in the backpack he was using that were still in cars that hadn't arrived yet. To bide time, we all went to the Spring City Bluegrass Festival, which was totally awesome. Not that I really love bluegrass, but there was such a feeling of fun and community there. To top it off, the official coolest guy in the world, Tennessee, the mayor of Spring City, was being incredibly nice to the boys. He gave them free goat meat which was seasoned to absolute perfection, topped only by Rodizio's prime rib. It was that good. Steve Peterson bought everybody a homegrown melon to share, and Tennessee just kept being the person everybody wishes they could be. Then, the drive home. I somehow lucked out and found my way to the airport despite my awful navigation skills, mostly by trailing an airport shuttle. I said goodbye, and then I was home. A happy ending to a happy story, eh?

working

2011-08-03T05:50:00.000-07:00

i'm currently working my a** offf.... :(

yeah yeah

2011-07-01T01:38:00.000-07:00

Hello folks,

thank God it's FRIDAY!

music

2011-06-07T14:05:00.002-07:00

boooring

2011-06-07T14:05:00.001-07:00

hey, im bored... went to see some friends but gotta get up so early so i had to go home..

Questionnaire for your blog -- who am I ?

2011-05-05T08:47:00.000-07:00

I found this cool questionnaire. Feel free to copy it with your answers!

NICKNAMES: snuffy, carro (from my real name caroline) and little C
BIRTHDAY: septemeber 11
HEIGHT: 1.60m (shorty..)
EYE COLOUR: Blue
HAIR COLOR: Blond
HANDED: Right in all situations in life.
FROM: Norway, but i live in Paris since 2 years.
PETS: Not for the moment but i love animals
PERSONALITY: ambitious, prevail-addicted and totally norweigan
HOBBIES: sleep, music, events (my job), party and fashion
LIKES: life!
DISLIKES: Stress, uncertainty, controversy
FAVORITE ACCENTS: Britsih English…

FAVORITE COUNTRY: UK and France
FAVORITE DAY OF THE WEEK: Saturday, fully in the weekend
FAVORITE DRINK: Rom & Cola!
FAVORITE FLOWER: Roses iand tulips
FAVORITE FOODS: Meat
FAVORITE GIRLS NAMES: Maria Lene
FAVORITE NUMBER: 2
FAVORITE POS SESSIONS: My laptop, my sofa and my text books

FAVORITE SHOES: Pink peeptoe :D

FAVORITE SPORT: Aerobic

THREE THINGS THAT SCARE ME
1. Terrorism
2. Fireworks and thunderstorm
3. Isolation

THREE THINGS I'D LIKE TON OF LEARN
1. Languages
2. much more computer things
3. as one is successful

My new The LG KU990

2011-04-08T07:29:00.001-07:00

The LG KU 990 Viewty is loaded with some very interesting latest features, which has a 3" touchscreen display with 240 x 400 pixels resolution, FM Radio, MP3 Player, the HSDPA 3.6 Mbps capability, the stereo Bluetooth and the highly intriguing 5 megapixel camera with autofocus, which is also capable of capturing video at 120 fps.

This phone is very simple designed. So, there are no complications involved in the handling of this handset. Moreover, the phone has a very simple look and is coloured black. However, the handset is also available in dark silver colour.

Features

GSM 900 / 1800 / 1900
3G Network HSDPA 2100
Display Type TFT touchscreen, 256K colors
Size 240 x 400 pixels, 3 inches
Camera 5 MP, 2592х1944 pixels, autofocus, video(VGA 30fps, QVGA up to 120fps), strobe flash; secondary VGA videocall camera
Bluetooth , v1.2 with A2DP, USB v2.0
Messaging SMS, EMS, MMS, Email
Browser WAP 2.0/xHTML, HTML
Java MIDP 2.0
Polyphonic (40 channels) MP3
MP3/AAC/MPEG4/WMA/ACC/DivX player, FM Radio with RDS
MicroSD, 100 MB shared memory
EDGE
3G HSDPA, 3.6 Mbps
Downloadable wallpapers
Data GPRS Class 10 (4+1/3+2 slots), 32 - 48 kbps
Organiser
Document viewer (DOC, XLS, PDF)
Voice memo, Video Editor/Video Calling/Video PlayerTV Output
Built-in handsfree
MicroSD, 100 MB shared memory
Battery Standard battery, Li-Ion 1000 mAh
Stand-by Up to 430 h
Talk time Up to 4 h
Size Dimensions 103.5 x 54.4 x 14.8 mm
Weight 112 g

Quick & Efficient Picnics

2011-04-08T07:18:00.000-07:00

Going on a picnic is a great family activity you can do during the weekends. There are lots of parks and other outdoor places you can go to set up your picnic. But when you get there, the food is cold and the salad is warm. You really cannot enjoy the picnic food you packed.

Better get yourself an insulated picnic backpack. These insulated bags ensure that your food stays at the optimal temperature. Look for bags with separate compartments for hot and cold foods, and an abundance of pockets for snacks, soda or juice. You can get a backpack with a set up for two or four people.

from
http://www.jonathanschoiceblog.com/tag/picnic-backpacks/

Wordpress vs Blogspot

2011-02-05T08:39:00.000-08:00

Hello everyone,

it's been awhile since I added something new.. I got a new job and I've been kinda busy. I left my old blog www.mylifeinanutshell.wordpress.com when some friends told me about blogspot.

I think blogspot is really cool, it's as easy as wordpress but more flexible when it comes to layout and css functions. I am still learning but hopefully i'll have a nice looking blog within a few weeks :) yeeaaay.

Not much new here in Paris, the new job as an event manager is taking a lot of my time and i will prob not get any vacation until septemeber... buhu.

I'll give you an update shortly.

Sink and Swim - America is the most bankrupt nation on Earth.

2009-04-08T07:32:00.000-07:00

America is the most bankrupt nation on Earth. Our government is for the nonce relatively solvent, its AAA rating intact. But our citizens declare bankruptcy at a rate that astonishes the rest of the world. In 2007, two years after we tweaked our bankruptcy law to make it tougher on debtors, the number of personal bankruptcies had dropped by more than half, but we were still well ahead of Great Britain, our nearest competitor in the Insolvency Olympics: roughly one in 500 Britons declared personal bankruptcy that year, against about one in 300 Americans. Since then, of course, the subprime crisis has increased our lead. We are the Michael Phelps of debt liquidation.

You’d think that title would be one we’d gladly relinquish. But in fact, America leads the developed world in bankruptcies because for more than a century, we’ve worked hard to build the best—and, not coincidentally, the most generous—bankruptcy code in existence. We didn’t do it by design, but in fits and starts; the hodgepodge of innovations that have helped systematically ensure that debtors get a fresh beginning were as much the brainchildren of grasping creditors as of beleaguered debtors. Nonetheless, our system works so well that other nations are trying to move away from their harshly punitive treatment of insolvent debtors, and closer to our free-and-easy, all-is-forgiven model.

Our leniency toward those with unsustainable debts helps not only profligate debtors, but the rest of us as well. Less onerous bankruptcy procedures boost rates of entrepreneurship: reduce the cost of failure, and people become more willing to take risks. America’s business environment is much more dynamic than that of Europe or Japan, for many reasons—and our generosity to capitalism’s losers is one of them.

Americans’ public attitude toward the bankrupt, however, is not nearly as generous as our law. Every move to make things easier for debtors meets with fierce resistance, not merely from creditors, but from ordinary people who are making payments on time. As this article went to press, the Senate was scrambling to find a compromise on a long-stalled House proposal that would allow bankruptcy judges to reduce the principal of home loans where the value of the property has fallen below the mortgage’s outstanding balance. Known as a “cramdown,” the idea was popular with most congressional Democrats, but apparently not with the voting public, which was telling pollsters in ever higher numbers that they thought the whole housing-bailout package was unfair.

And isn’t it? Most people didn’t take out giant loans with tiny down payments or do repeated cash-out refinancings. Yet the cramdown plan would make the sober, steady majority foot the bill for other people’s mistakes. First they would pay as taxpayers by helping to subsidize troubled loans. Then, the next time they needed a mortgage, they’d be charged a higher interest rate to compensate for the risk that they might declare bankruptcy and ask a judge to cram down their loan. And maybe they’d have to pay a third time, again as taxpayers, by bailing out banks that got too many of their loans crammed down. Meanwhile, the guy down the street who took out a second mortgage he couldn’t afford, to remodel, would be sitting pretty in his $60,000 kitchen.

It isn’t fair. But by the time someone is in bankruptcy, the time for fairness is already long past. Bankruptcy is the legal recognition that someone lacks the resources to meet financial obligations. Our system works so well precisely because it mostly sets aside our instinct for just deserts, and instead focuses on minimizing the costs to everyone. It lays out clear and predictable rules for lenders and borrowers, so that they can plan for disaster, and escape as quickly as possible if it arrives. Still, it’s plain as day that, in the current crisis, a whole lot of people are getting help they haven’t earned. As a result, commentators, academics, and legislators presiding over hearings have diverted much time and energy away from hashing out the ugly details of rescue efforts and toward making the one point on which we can all agree: these relief measures don’t seem fair.

But imagine a system that would be “fair” in the eyes of Rick Santelli, the CNBC reporter ranting about “losers” with underwater mortgages, or of Senator Charles Grassley, who suggested that AIG executives should consider seppuku. Under such a system, a bankrupt company wouldn’t get to keep its management; it would be turned over to a receiver, so feckless executives wouldn’t get any further benefit from the company they’d ruined. Ideally, those executives would be personally liable for as much of the company’s debt as feasible, and they certainly wouldn’t be able to shed that liability with a well-timed personal bankruptcy.

But it’s not just executives who would suffer; in a really fair system, ordinary joes who ran merely their households into the ground wouldn’t get off easy, either. After all, most people who end up in bankruptcy made some decision that landed them there; a recent study indicates that the main difference between those who declare bankruptcy and others with the same income who do not is simply how much debt they took on. With more “fairness,” heavy borrowers couldn’t just walk into a court, turn over their spare cash, and walk away free, as those who declare bankruptcy under Chapter 7 do today. (Granted, they take a big hit on their credit report.) Those who are not actually destitute would be put on a very tight budget, and the excess would be turned over to their creditors to repay debts. And if they’d been really irresponsible, borrowing and wasting money they had no hope of repaying, perhaps they wouldn’t be allowed to discharge their debts at all. Creditors could seize any little bit of money the debtors ever got their hands on, until the ill-spent borrowings were paid off.

That feels, if not fair, at least fairer—people who have cost other people a lot of money ought to suffer a bit themselves. As it happens, this process describes bankruptcy in much of Europe. And it turns out that it’s not so great.

Let’s start with the corporate side. Receivership, even as practiced in a relatively forgiving country like Britain, often results in liquidation, not reorganization. Sudden changes of the entire management are hard enough in normal times, but when they take place in bankruptcy, the difficulties are multiplied. Very few people want to go to work for a company that may be terminal, particularly if a tightfisted receiver refuses to pay a premium for their efforts.

Liquidations are very costly. Workers get fired, of course; suppliers lose business; local governments lose tax revenue. But they’re costly even for creditors. Picture what would happen if a receiver shut down GM’s assembly lines until they could be sold. The workers would scatter, and with them, painstakingly accumulated human capital. The value of the inventory would plummet. Who wants to buy a car with no warranty and no pipeline for replacement parts? The residual value that GM has built up over decades in marques like Cadillac would vanish. Thus, creditors are often better off accepting partial debt payments from a going concern than selling off the assets piecemeal.

But if corporate liquidation, Euro-pean-style, is so punitive, why does America encourage individuals to liquidate—letting them trade the assets they have on hand for a full discharge—rather than making them work off as much of their debt as possible? In theory, making bankruptcy harder should make us all better off: by discouraging people from taking on too much debt, by paying creditors as much as possible, and by delivering a little just retribution to debtors for their profligacy.

That was the reasoning behind the 2005 bankruptcy reform. Although filings spiked before the law took effect, immediately thereafter they fell off a cliff. In 2006, just 598,000 people filed for bankruptcy, the fewest since Ronald Reagan was president. Filings have increased since but are still well below the rates that prevailed in the relatively sunny economic climate of 2004.

Harsher bankruptcy rules are seemingly doing what we wanted them to do: discouraging excessive risk taking. The question, though, is Which risks?

Look at entrepreneurs. All of the business literature indicates that starting a business is a phenomenally stupid thing to do. Most new businesses fail, and not simply because most would-be entrepreneurs are actually no-hopers. Even people who have founded successful companies in the past still have a 70 percent chance of failing. All those business failures are costly—but the successes are the difference between us and Tanzania. We want people to take these kinds of risks, even if that means we write off a lot of bad debt.

Tougher bankruptcy laws don’t necessarily curb the kind of behavior we want to discourage: borrowing money you have no way to repay, in order to buy unnecessary consumer goods. The amount that households put on their credit cards didn’t fall after the 2005 reform; over the next two years, it rose 12 percent. According to Michelle J. White, an economist at the University of California at San Diego, many bankrupts are what economists call hyperbolic discounters—people who pay a lot of attention to current pleasures, and very little to future costs. That’s why a person’s debt, not unemployment or divorce, may be the best predictor of bankruptcy.

If you’re the kind of person who buys now and worries later, the idea that government is making your inevitable bankruptcy filing slightly more annoying won’t discourage you. Actually, a higher hurdle to bankruptcy will make things worse, because banks will offer to lend you more money if getting the debt discharged is harder for you—money that you will happily, and irresponsibly, borrow and spend. The people who are most likely to be deterred from borrowing are the people who are taking the rationally contemplated risk of starting a company or buying their first home.

Of course, we’ll at least squeeze a little extra cash out of the real deadbeats. Maybe. Most repayment plans set up under Chapter 13 fail. People who weren’t previously good at living on a budget don’t magically get better at it with a court order. Moreover, job losses or other unexpected events can derail the highly structured payment plans. And the costs of administering an ongoing plan are much higher than for a simple discharge and write-off.

Meanwhile, those payment plans lash people to their old lives, even though those lives weren’t working all that well; it’s hard to move, or get training, for a better job if a court has to approve the expense—and why bother, if a trustee might seize the extra income? In the worst case, the failed Chapter 13 proceeding leaves the most-vulnerable people mired even deeper in debt they can’t repay. Such outcomes start to sound less like “fairness” and more like “throwing good money after bad.” Look around. Do the banks seem sounder because we made it harder for people to shed their debts?

These problems are simple compared with the questions raised by the current crisis. Existing bankruptcy law has no easy formula for dealing with a behemoth like Citi, or even GM, that has international subsidiaries, and where any punitive action we take could have massive unintended consequences. But we can look to the bankruptcy law we’ve evolved for some principles about what works. And what it seems to tell us is that, regarding insolvents, we too often ask the wrong question: Who should pay? rather than Who can?

Bankruptcy’s greatest boon is orderly liquidation of past failures so that banks and borrowers and insolvents can trust in their futures, invest in them. Yet listen to the public commentary on the bailouts, and you’d think that half of America would happily gut the rule of law if doing so would let them punish a single undeserving executive. Is penalizing the traders at AIG really more important than upholding a long-standing liberal democratic tradition?

In ordinary times, we maintain a sort of society-wide doublethink about the problem of insolvency. We all agree that it is a very terrible thing that should be avoided at all costs—but once it has actually happened, we try to forget about the past as quickly as possible, and we focus mostly on providing a predictable and relatively painless way for the insolvents to get back on their feet. That strategy, developed over time through trial and error, has served us well for most of our history. Why is it now a piece of the past that we’re only too willing to abandon?

Megan McArdle is The Atlantic’s business and economics editor, and the editor of business.theatlantic.com.

A friend who also practices Bankruptcy law recently had the following situation arise: Chapter 7 client (filed 10/6/08, discharged 2/3/09), who recently called about HOA fees from post Bankruptcy filing. She filed Chapter 7 with intent to surrender and moved out on November 1, 2008. She hasn’t paid the HOA fee since then, and now they are coming after her (post Bankruptcy discharge) for the post filing HOA fees, plus interest. The house has not yet been sold by the bank despite the intent to surrender and abandonment of the house more than 6 months ago and the client is technically still the owner on record. She was current on the HOA fee until she moved out of the house. It’s not the client’s fault the bank hasn’t held the foreclosure sale yet… so is there any way to shift the fees on to the bank?

It may be that if she can hold off paying until the property is foreclosed and sold to someone, the bank will have to pay the HOA fees to get clear title. However, it may depend on how much the HOA fees are. If they are a lot, I have seen banks stall a long time in foreclosing so as to make the debtor pay those fees. If she does not pay, the HOA can get a judgment against her, garnish, etc., basically all the things she filed bankruptcy to get rid of.

It may be advisable to tell a client to live in the place and pay the post-petition HOA fees until the title changes and the lender finally kicks them out. The HOA fee is generally cheap rent. In this case, the Bankruptcy client will probably end up having to pay. Figuring out what to do about HOA fees is part of Bankruptcy planning. Another alternative is not to file for Bankruptcy until the foreclosure is done or almost done. Even when you file at the end of the foreclosure process, the lender may not transfer and/or record the deed so as to make debtor have to pay the HOAs. If the HOA fees are substantial, it can be a significant issue in the Bankruptcy case. There has been talk on the list of filing a quit claim deed transferring the title to the lender. Someone raised the issue that a gift has to be accepted. It may not be a gift when the lender has foreclosed but just not filed the deed. The lender obviously has the intent to take and own the property, and it already has the right to ownership and possession from the completed foreclosure process post Bankruptcy. The quit claim deed merely finalizes the transaction.

How Bankruptcy Can Help With Foreclosure

2009-04-04T07:34:00.000-07:00

(Nolo)

Avoid or delay foreclosure of your home by seeking bankruptcy protection.

If you are facing foreclosure and cannot work out a deal or other alternative with the lender, bankruptcy may help.

If you get behind on your mortgage payments, a lender may take steps to foreclose — that is, enforce the terms of the loan by selling the house at a public auction and taking payment of your loan out of the auction.

This won’t happen overnight. The foreclosure process typically starts after you fall behind on your payments for at least two months, and often three or four. That gives you time to try some alternate measures, such as loan forbearance, a short sale, or a deed in lieu of foreclosure.

But if you’ve already tried and failed with these measures, now is a good time to consider bankruptcy as a possibility for avoiding or stalling foreclosure. Here are some ways that filing for bankruptcy can help you.

The Automatic Stay: Delaying Foreclosure

When you file either a Chapter 13 or Chapter 7 bankruptcy, the court automatically issues an order (called the Order for Relief) that includes a wonderful thing known as the “automatic stay.” The automatic stay directs your creditors to cease their collection activities immediately, no excuses. If your home is scheduled for a foreclosure sale, the sale will be legally postponed while the bankruptcy is pending—typically for three to four months. However, there are two exceptions to this general rule:

Motion to lift the stay. If the lender obtains the bankruptcy court’s permission to proceed with the sale (by filing a “motion to lift the stay”), you may not get the full three to four months. But even then, the bankruptcy will typically postpone the sale by at least two months, or even more if the lender is slow in pursuing the motion to lift the automatic stay.

Foreclosure notice already filed. Unfortunately, bankruptcy’s automatic stay won’t stop the clock on the advance notice that most states require before a foreclosure sale can be held (or a motion to lift the stay can be filed). For example, before selling a home in California , a lender has to give the owner at least three months’ notice. If you receive a three-month notice of default, and then file for bankruptcy after two months have passed, the three-month period would elapse after you’d been in bankruptcy for only one month. At that time the lender could file a motion to lift the stay and ask the court for permission to schedule the foreclosure sale.

How Chapter 13 Bankruptcy Can Help

Many people will do whatever they can to stay in their home for the indefinite future. If that describes you, and you’re behind on your mortgage payments with no feasible way to get current, the only way to keep your home is to file a Chapter 13 bankruptcy.

How Chapter 13 works. Chapter 13 bankruptcy lets you pay off the “arrearage” (late, unpaid payments) over the length of a repayment plan you propose—five years in some cases. But you’ll need enough income to at least meet your current mortgage payment at the same time you’re paying off the arrearage. Assuming you make all the required payments up to the end of the repayment plan, you’ll avoid foreclosure and keep your home.

2nd and 3rd mortgage payments. Chapter 13 may also help you eliminate the payments on your second or third mortgage. That’s because, if your first mortgage is secured by the entire value of your home (which is possible if the home has dropped in value), you may no longer have any equity with which to secure the later mortgages. That allows the Chapter 13 court to “strip off” the second and third mortgages and recategorize them as unsecured debt – which, under Chapter 13, takes last priority and often does not have to be paid back at all.

How Chapter 7 Bankruptcy Can Help

It may be that you’ll have to give up your home no matter what. In that case, filing for Chapter 7 bankruptcy will at least stall the sale and give you two or three more months to work things out with your lender. It will also help you save up some money during the process and cancel debt secured by your home.

Saving money. During a Chapter 7 bankruptcy, you can live in your home for free during at least some of the months while your bankruptcy is pending — and perhaps several more after your case is closed. You can then use that money to help secure new shelter.

Canceling debt. Chapter 7 bankruptcy will also cancel all the debt that is secured by your home, including the mortgage, as well as any second mortgages and home equity loans.

Canceling tax liability for certain property loans. Thanks to a new law, you no longer face tax liability for losses your mortgage or home-improvement lender incurs as a result of your default, whether you file for bankruptcy or not. This new law applies to the 2007 tax year and the following two years

However, the new tax law doesn’t shield you from tax liability for losses the lender incurs after the foreclosure sale if:

the loan is not a mortgage or was not used for home improvements (such as a home equity loan used to pay for a car or vacation), or
the mortgage or home equity loan is secured by property other than your principal residence (for example, a vacation home or rental property).

This is where Chapter 7 bankruptcy helps. It will exempt you from tax liability on losses the lender incurs if you default on these other loans. For more information on Chapter 7 bankruptcy,

Chapter 7 Cannot Cancel the Foreclosure

With all this debt being cancelled, you may be wondering why the foreclosure on your home won’t be cancelled too. The trouble is, when you bought your home you probably signed two documents (at least) — a promissory note to repay the mortgage loan, and a security agreement that could be recorded as a lien to enforce performance on the promissory note.

Chapter 7 bankruptcy gets rid of your personal liability under the promissory note, but it doesn’t remove the lien. That’s the way Chapter 7 works. It gets rid of debt but not liens – you’ll still probably have to give up the house under the lien since that’s what provided collateral for the loan.

Chapter 7 Bankruptcy May Not Be Right For You

Not everyone can or should use Chapter 7 bankruptcy. Here’s why:

You could lose property you want to keep. Chapter 7 might cause you to lose property you don’t want to give up. As an example, if your wedding ring is particularly valuable, it may exceed the dollar amount of jewelry you’re allowed to keep in a bankruptcy (under something called the “jewelry exemption”). In that case, the bankruptcy trustee could order you to turn the ring over to be sold for the benefit of your creditors.

You may not be eligible. Even if Chapter 7 bankruptcy would work for you, you may not be eligible. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, you are not eligible if your average gross income for the six-month period preceding the bankruptcy filing exceeds the state median income for the same size household. Nor are you eligible if your current income provides enough excess over your living expenses to fund a reasonable Chapter 13 repayment plan.

Bankruptcy’s Effect on Your Credit Score

Both bankruptcy and foreclosure will damage your credit score. However, sometimes bankruptcy is the preferable option when trying to rebuild credit. Here’s why:

A foreclosure will damage your credit score for many years, will not get rid of your other debt, and is particularly harmful if you are house shopping.

In contrast, discharging your debts in bankruptcy will harm your credit score, but can help you rebuild your score quicker than after a foreclosure. This is because bankruptcy will leave you solvent and debt-free – and therefore able to start rebuilding good credit sooner.

Keep in mind that the current mortgage meltdown and credit crunch (which are prevalent at the time this article is being written) may change the way bankruptcy and foreclosure affect credit ratings.

If All Else Fails: Relief From Debt and Tax Liability

If you’re certain you won’t be able to propose a Chapter 13 repayment plan that a bankruptcy judge will approve, and Chapter 7 will provide only a temporary delay from the foreclosure sale, then what’s the point of either?

If you have to lose your home — a bitter result to be sure, but sometimes unavoidable — you can at least view bankruptcy as the best way to get out from under your mortgage debt and tax liability. Bankruptcy also offers a way to save some money, which will help you find new shelter and weather the psychological and economic shocks that lie ahead.

(Nolo).