Bankruptcy Blogs

Some argue that nonbank mortgage lenders' rising market share poses a risk to the financial system. But this belief arises from an inaccurate understanding of what is in fact a well-regulated sector.

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In a chapter 7 or 13 bankruptcy case, a "creditors' meeting" is held three to seven weeks after the case is filed. The bankruptcy code requires this meeting to be held.  Although called a "creditors' meeting," in most cases no creditors attend.

A chapter 7 creditors' meeting is usually presided over by the chapter 7 trustee and a chapter 13 creditors' meeting by the standing chapter 13 trustee. The debtor is required to attend to creditors' meeting unless there are special circumstances to excuse attendance.

In a much awaited decision, the United States Supreme Court recently ruled in favor of Bank of America and held that "underwater" mortgages are not avoidable in a chapter 7 liquidation case. This ruling reversed the decision of the 11th Circuit Court of Appeals located in Atlanta, which covers an area in the southeastern United States. Since many other Courts in other parts of the United States have held that "underwater" mortgages are not avoidable in chapter 7 cases for many years, this new decision does not change the practice in many parts of the country.