Was remembering my Ben Franklin recently and some gems came to mind in these difficult times.  In his "Poor Richard's Almanac" as well as "The Way to Wealth" Ben has some wisdom to share that we all need to remember:

"Industry Pays Debts while Despair Increaseth Them"

"Diligence is the Mother of Good Luck and God Gives all things to Industry"

"One Today is Worth Two Tomorrows"

No Surprise that filings are up given the economy, especially in light of recent Federal Reserve comments this week...

Personal Bankruptcies Rise, Reversing Trend - WSJ.com

online.wsj.com

U.S. personal bankruptcies rose 9% last month, reversing a trend of declining filings over the previous three months and highlighting the continuing financial struggles of many consumers.

Principal Reduction on Mortgages.  This Reuters Article/Blog finally discusses principal reduction being on the table for Fannie Mae and Freddie Mac...about time!

http://blogs.reuters.com/james-pethokoukis/2010/08/05/an-august-surprise-from-obama/?cp=5#comment-8818

Look folks...the blame game is pointless.  Stabilizing the US Housing Market is the KEY to ending the recession.  If the cramdown bankruptcy bill would have passed in May 2009, the real estate market would already be stable and more people would have kept their homes...this is just an executive version of that bill.  

Hey, we've already paid Fannie & Freddie the $75billion.  The bankruptcy cramdown would have done the same except not on the backs of taxpayers.  Thank Republicans for the extra TAX! 

Many members of Congress already got their $$$ from the banks so cramdown failed.  Wanna blame somebody, blame the GOP, Big Banks and their stranglehold on Congress for many years before President Obama.

The irony is when we try help THE PEOPLE, it's a handout....when we help the banks, its a bailout!  This is non-sense.  Moral problem if it's a US Citizen but no moral problem when a bank walks away from a bad investment.  The only reason people are walking away from their homes is they are now thinking like bankers...it's a business decision.  This gives them a reason to keep paying and keep their home!  Consumer Bankruptcy Attorney Richard R. Baker, Orlando, Florida www.legalquestion.com

Many people do not know about Chapter 12. This is a bankruptcy case for farmers and fisherman. One advantage is you can cramdown and restructure your home mortgage, something you cannot do in Chapter 13. Our good friend Doug Neway, Jax Chapter 13 Trustee administrating these case and leading the way! Good job Doug!

No. 1 in Chapter 12 - District leads nation in farmer, fishermen bankruptcies

www.jaxdailyrecord.com

Jacksonville has another distinction. The Middle District of Florida leads the nation in Chapter 12 bankruptcy filings. Within it, the Jacksonville Division leads other divisions nationwide, too. Chapter 12 is designed for family farmers and family fishermen with regular annual income and allows t...

Credit Card Companies Never Stop! New Junk Fees! Where there is a will, there is a way..right? Greed Never Sleeps!  Rick Baker, Esq. www.legalquestion.com

A Consumer's Guide to the Latest Credit-Card Traps - WSJ.com

online.wsj.com

Just months after historic legislation banned certain billing practices, card issuers have dreamed up new ones designed to trip up consumers.

How much do I have to pay unsecured creditors in my Chapter 13?

A less experienced Bankruptcy Lawyer I know recently asked me about his Chapter 13 Bankruptcy client who owned a rental property that actually had some equity in it; very rare these days.

He wanted to know whether it would have to be liquidated (sold) to pay unsecured (usually credit card) debts in the case? 

The real question is not whether it has to be sold, as Chapter 7 is liquidation whereas Chapter 13 is an individual reorganization and no liquidation occurs.  The real question is if he keeps the rental property and it has non-exempt equity, what does that mean?

The answer is that the non-exempt equity in the rental house establishes the “floor” or minimum amount required to be paid pro rata to all allowed unsecured claims but no liquidation occurs.

My less experienced Bankruptcy Attorney friend forgot or did not realize that there are actually two (2) tests to determine how much gets paid to the unsecureds in a Chapter 13 bankruptcy case. 

The above example of non-exempt equity establishing the minimum payout to the unsecureds is called the liquidity test.  The other test is whether there is any excess disposable income left for the unsecureds after payment of priority and secured debts in the Plan.

A new third test may result soon based on the recent U.S. Supreme Court decision of Hamilton v. Lanning; more to come on that one.

This issue points out an advantage to filing Chapter 13 Bankruptcy.  The Debtor remains in control of assets and can keep them.  They may have to repay some portion of their debts but it could be pennies on the dollar relative to what they gain in keeping assets. I call these cases “Liquidity 13s.” 

The rule is that the unsecured creditors have to come out as well in Chapter 13 as they would in a Chapter 7 case where assets are liquidated to pay unsecureds.  The advantage of the 13 is control over the asset is not in the hands of a Chapter 7 Trustee.  By Consumer Bankruptcy Attorney Richard R. Baker at BAKER LAW, PLLC. www. LegalQuestion.com

 http://www.facebook.com/pages/Winter-Park-FL/BAKER-LAW-PLLC/12498355753631

 www.Twitter.com/BakerLawFL 

Offices in Winter Park, Florida.

Former Kiss Guitarist Loses Bankruptcy Appeal - Bankruptcy Beat WSJ: http://bit.ly/a0jvtw 

The sad reality of being the side man..why didn't Dr. Love just pay this guy his royalties? Answer: Greed!

Three Reasons Why Upside Down Homeowners Should Consider Bankruptcy http://bit.ly/9fXgln 

Another good blog that ties in with a recent blog I wrote on this very issue.

Three Personal Finance Mistakes That Lead To Bankruptcy http://bit.ly/9u2fAC  

Great post from Reed Allmand in Texas.  Bankruptcy “Alternatives” Could Cause More Financial Pain http://bit.ly/9xfmlM