Monthly Archives: March 2007

Sheriff Sales — Online

Have you checked the Oklahoma County web page lately? There is a link in the left-hand column for Sheriff Sales. So, I clicked it.

The next page either lets you print a complete listing of scheduled Sheiff’s Sales or view them online organized by sale date. I took a look at the April 5, 2007 docket. I could scroll down the page and view the property address, attorney information, case number and Sheriff’s appraised value. Beneath that was what looked like a blank space for Assessed value and another for taxes. These aren’t blanks. They are hot links to the Assessor’s property card and tax payment history for the property.

So, very quickly you can tell the square footage, pull comparable sales figures, check the recent sales history, year of construction and frequently view a picture of the property.

So, did I see anything interesting? I thought you would never ask.

One of the first things that I noticed is that the Sheriff’s appraisal is frequently coming in below (in some cases significantly below) the assessed value. Second, want a house in Quail Creek? How about Nichols Hills or Val Verde? They’re there. There is actually one house with an assessed value in excess of 1/2 a mill. Now, the County has it appraised for less. If it sells for opening bid many thousands of square feet of excess can be yours for as little as $320,000.

I was having so much fun I thought I would print off the listings. So, I hit the print button. Then, the phone rang; and I was distracted temporarily by this thing called work. When I turned back around the printer was still going. Fifty pages later it stopped. Those are the next three sales dockets, and there are generally six listings per page.

I think I had better get back to work.


Secured Loans — Pay now, pay more later

Twice in the last two weeks I have talked to people who had a significant piece of collateral reposessed, and after applying the proceeds the lender tried to tell them that they now owed more than they had originally borrowed.

These are not reverse amortization or interest only loans. These are aggressive repo. and attorney fees plus a healthy spice of late fees, penalties and interest charges.

The borrower now has limited options:

  • Pay more in a deficiency than the original principal balance;
  • Hire a lawyer, and probably an accountant as well, to challenge the lender’s collection and accounting procedures; or
  • File for bankruptcy.

So, why should borrowers give collateral for a loan if they are going to wind up in more trouble in the event of default than if they hadn’t? Why not pay a slightly higher interest rate (and both of these people could have gotten the loans as unsecured loans at the time they were made), buy the collateral, own it free and clear, claim it as exempt if it is a vehicle; and then if there is a default — keep the collateral and owe LESS money, because of fewer opportunities to assess repo. and collection charges?

When did we change the rules so that you have to be a sucker to do a secured loan?



There are days I have more questions than answers.

If a lender makes a mortgage loan disguised in the form of a line of credit to a 69-year-old woman who can barely make the payments as long as she is working but won’t be able to as soon as she stops, is that predatory?

If someone moves to another State for a few months and then moves back, can they use the Federal exemptions and hide a tax refund under the Federal wildcard?

If a debtor doesn’t raise a Truth in Lending claim in a collection case and allows a default judgment to enter before filing a Chapter 7 Bankruptcy, does that estop the Trustee from pursuing the claim on behalf of the Estate?

If someone qualifies for free credit counseling but has assets, what are the chances of getting the Bankruptcy filing fee waived?

How on Earth are we going to deal with non-priority, non-dischargeable taxes in Chapter 13’s?

How many of the homeowners currently defaulting on sub-prime mortgage loans would have defaulted if they had gotten a higher quality loan product?

How many of the homeowners losing their houses in foreclosure have been offered meaningful loss mitigation as required by FHA regulations or pooling and servicing agreements?

How many FHA mortgages are sent to foreclosure when they are less than 90 days past due in violation of Regulations? (I know of one.)

How many depository institutions have gotten away with offsetting a bank balance against a credit card debt in violation of Federal Statute? (I know of one.)

So, how was your Tuesday?


B22, I and J, Making Sense of It All

We have the first decision out of the Western District of Oklahoma addressing the deduction of secured debt that the debtor intends to surrender in the Bankruptcy. The case is In re: Galyon, decided by Judge Weaver March 22, 2007. (Judge Weaver got it right, by the way, he ruled for the Debtor.)

Like several of the cases before it Galyon flirts with the idea of examining the debtor’s financial position (income and expenses) retrospectively and prospectively. So far, though, none of the opinions has used this issue to make sense of the intersection of the Means Test and I and J.

When BAPCPA was first passed it appeared that the Means Test should be completely retrospective. After all, it defines income in terms of all income received by the debtor in the six complete months prior to the time the Bankruptcy was filed. It doesn’t say, if those six months are typical or if the Debtor still has that income. It is a carved in stone formula, and it doesn’t make sense to say that you use pre-petition income and expenses from a different time period when income might be completely different. (Yea, yea, I know trying to make sense out of BAPCPA is a 0% argument. I keep trying.)

Ok, so the Means Test is retrospective and I and J is prospective. Got it. This makes sense. The Means Test determines whether the Debtor should have been making payments prior to filing, and I and J determines whether or not the Debtor has the capacity after filing to pay his debts.

Except it didn’t seem to work that way. To date, there have been at least a half dozen opinions on this very issue. Most have come down on the Debtor’s side. None of them have taken the position which seems very supportable by the Statute that the Means Test is retrospective and I and J prospective. It is simple. It is easy. It makes sense — It can’t possibly have anything to do with the new BK Code.

Instead, Judge Weaver relied on the plain language of the Statute. Of course, most of the courts to decide the issue have said that. Some of them, have done a better job of torturing the plain language than others. Judge Weaver, siding with the emerging majority, found that “scheduled as contractually due” means that if the Debtor was contractually obligated to pay the debt — its deductible.

Ok, so now who is going to be the first person to try to deduct the full amount of an accelerated mortgage?


Debtors Get a Cost of Living Adjustment

I was going to write a scintillating post about FHA loss mitigation regulations and how they may or may not apply to defend (or just bog down) foreclosure proceedings. I would say that they make fascinating reading, but I try not to violate more than one of the Ten Commandements before lunch.

Anyway, I had almost forgotten something much more pressing. The Bankruptcy Code with its almost endless source of numbers — changes a few effective April 1. You would think that the Bankrutpcy software providers had paid for frequent updates to threshold numbers in the new act, but this set of changes has been around for a while. Evey third April since 1998 virtually all the dollar figures in the Code get a cost of living adjustment.

So, in addition to the change in median income figures and IRS allowables effective in February (you did update your software the first of last month if you do Bankruptcy work, right?); starting April 1, 2007 virtually all of the dollar amounts in the BK Code change. That includes the debt limits for Chapter 13, dollar values for Federal exemptions (no longer meaningless in Oklahoma), and the required monthly dividend to unsecured creditors necessary to flunk the means test. So, if you have a really close means test, hold off about 9 days. Here is the complete list, straight from the Federal Register. Cost of Living Adjustment to BK Code 2007

Oh, and don’t forget, that $1,000,000 cap on qualfiied retirement accounts — is now $1,095,000. Fortunately, in Oklahoma our retirement account exemption is unlimited, so this won’t effect my single parents raising kids on $8.50 an hour.

Oh, I’ll be out of town this weekend, but there should be something equally relevant and fascinating posted by Monday.


Hospital Billing and Consumer Protection Acts

I have to be missing something. I know that, I’m just hoping somebody will tell me what it is so I don’t have to figure it out the hard way.

A friend was telling me about a hospital billing issue. The long and the short of it is that she was billed a 1,000% markup for some things that she could have supplied herself at cost. This product was sold to her in addition to itemized services. This happened several times over a period of three months. She didn’t find out about it after the first bill, because it went to the wrong address. By the time she got the address straightened out, the bill was huge.

Anyway, charging a 1,000% markup (yep, that is not a typo) strikes me as unscrupulous and seriously injurious to the consumer — the mark of an unfair trade practice as defined by the Oklahoma Consumer Protection Act. The Act applies to “consumer transactions” which are defined as the advertising, offering for sale or purchase, sale, purchase, or distribution of any services or any property . . . for purposes that are personal, household or business oriented.

Health care strikes me as a pretty personal purpose, and medical goods and services are services or property; so, has anybody challenged a hospital billing practice using a consumer protection (or other UDAP) statute?



The massive amendment to the Bankruptcy Code known as BAPCPA has been law for well over a year now. That really doesn’t seem possible. What seems even less possible is how much of this law we still don’t really have figured out, and how unaware the local bar (myself included) seems to be of that as we go along avoiding issues.

Some things that are issues elsewhere, haven’t been here. Other things we have managed to work around instead of arguing and getting decided. Most people filing now are in such bad shape that claiming an ownership allowance for a paid-for vehicle or deducting secured debt on the means test for property that is to be surrendered simply doesn’t make a difference.

I think it is a little too easy to follow the path of least resistance. If I know that something will draw an objection — even if I think that objection is flat out wrong — it is still easier to find another way around the problem.

Regardless, it is time for that to stop. We need to start facing some of the absurdities of the Code head on.

Brave words, I know.


Plain Language in an Inconsistent, Contradictory Code

The Tenth Circuit recently had an unenviable job. They had to enter a decision that was clearly contrary to the plain language of the Bankruptcy Code — because the U.S. Supremes said to.

The case is Troff v. State of Utah (In re: Troff); Case No. 05-4244, (10th Cir. March 15, 2007). I think that I have successfully attached a copy of it to this post — we’ll see. ( In re: Troff) Troff dealt with some unusual facts, but in a world where the plain language of the Statute frequently makes no sense at all, how the Tenth is going to apply a conflict between plain language and established policy concerns should be of interest.

The actual issue in Troff was whether or not a Debtor could discharge a claim for criminal restitution that was actually paid for the benefit of the crime victim rather than for the benefit of a governmental unit — which is an express requirement of Section 523( a)(7).

The plain reading of the Statute appears to require discharge in this case. Unfortunately for the Debtor, that was also true in a U.S. Supreme Court case, Kelly v. Robinson, 479 U.S. 36 (1986). Basically, the U.S. Supreme Court has already interpreted Section 523(a)(7) away from the plain language of the Statute in the interests of Federalism. Basically, they found a way in 1986 to make all criminal restitution come within the scope of this imperfectly drafted exception to discharge.

The Tenth Circuit was bound to follow that authority. Two things make this opinion interesting. First, is the Tenth’s admission that they consider Supreme Court dicta binding, as well as the actual holding. Second, is the language of the opinion and the concurring opinion which seem to indicate a strong preference on the part of this panel of the Circuit to follow plain language wherever possible.

Given the litany of problems with the plain language of the new Code, the language of this opinion may well become widely cited.