Florida Leads The Nation in Vacant Foreclosures—How to Avoid Losing Your Home

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If you are going through a foreclosure or if you are on its brink, you are not alone.  According to RealtyTrac, a real estate research firm, Florida has the most vacant foreclosures in the country—about 55,503 of the total.  A vacant foreclosure is when a family leaves a home empty because they can’t pay the mortgage.  Even though the economy seems to be improving, some families are still struggling to hold on to their homes.  Many don’t want to file bankruptcy for fear they will lose their home.  They wait too long and they end up facing foreclosure anyway.

Your home doesn’t have to become a vacant foreclosure or sold on the courthouse steps.  And you don’t have to be afraid of bankruptcy.  We at the Bankruptcy Law Clinic have had a lot of success working with clients with a new loan modification program.

Here’s how we could help you with a loan modification inside of a Chapter 13 Bankruptcy:

1. No more endless rounds of duplicate or “lost” paperwork.  The loan modification is included inside of a Chapter 13 Bankruptcy which has its own very extensive paperwork requirements.  You can be sure, with the power of the U.S.  Federal Bankruptcy Court involved; banks will keep better track of the paperwork provided or risk receiving sanctions (fines) from the bankruptcy court.

2. Balance of power has shifted.  In a normal loan modification, you send your paperwork away and the bank eventually gets back to you with a proposed modified interest rate, term, monthly payment, etc. and you can basically take it or leave it.  When you do it in a Chapter 13 Bankruptcy, WE CREATE the proposed loan modification with the terms we’ve created and the banks must react to what we have created. 

3. Prompt response.  We’ve all heard the horror stories of people being in loan modification programs for years, with the bank rejecting their loan modification for numerous reasons, sometimes even after they have successfully made their trial payments.  With the U.S.  Bankruptcy court taking an active interest, you can be sure that your bankruptcy and loan modification will move swiftly.  The new lower mortgage is reflected in the first payment in a Chapter 13 Bankruptcy, which is typically sent only 30 days after your bankruptcy is filed.  One month vs.  two years?  I know which one our clients prefer! 

4. No additional upfront fees.  Depending on the law firm and the complexity of your case, some law firms charge from $1,500 to $3,600 for a loan modification.  When you do your loan modification inside of a Chapter 13 Bankruptcy, no additional upfront legal fees are required beyond what you already are paying for your bankruptcy.  

5. All the normal benefits of a bankruptcy.  When you do a bankruptcy, you eliminate all your unsecured debts, which means in addition to a lower first mortgage, we may be able to strip and eliminate your second mortgage and your Home Equity Line of Credit.  We will also eliminate all the credit cards, car repos, medical bills, payday loans and other bills that prevent you from getting the fresh start you deserve. 

This is not an easy process.  But it is one that we do for our clients, allowing them to stay in their homes, eliminating their debts and giving them the fresh starts they deserve.

What Homeowners Should Know About Foreclosure Defense

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Many homeowners across the nation are finding themselves in a difficult predicament and facing foreclosure on the home that they have worked so hard to attain for their family and loved ones.  Receiving a notice of intent to foreclose can be a devastating event; however, not all hope is lost.  Foreclosure defense is a way of actively fighting back against the lender to either stall the process of foreclosure or stop it altogether. 

Since banks have significantly changed the way in which they conduct business, working with your lender during times of financial distress is not as easy as it used to be.  Through mortgage securities, lenders package and sell pools of mortgages to investors and only act as “servicers” who collect payments and issue default notices.  The system is set up in such a way to where these servicers (that you think of as your lender) are making money by foreclosing on your home and losing money in working with you to modify the terms of your mortgage.  Put simply, foreclosure defense has become a necessity if you want to keep your home. 

 

Mortgage defense consists of a process in which an attorney who understands the laws and regulations around the mortgage and lending industry requires your lender to prove they have the right to foreclose on your home.  This works as a stalling tactic, especially since many lenders have already sold the mortgage to an investor as part of a mortgage pool, and might have difficultly proving on paper that they own the mortgage. 

This process often reveals errors on the part of the lender, such as an inability to produce the original note or proof that they have participated in “robo-signing” of documents.  Such errors allow the homeowner additional time to get caught up financially, which often results in saving their home.  

My wife recently lost her job and we will be unable to pay our Chapter 13 bankruptcy payments. Is there any way we can get the bankruptcy court to lower our required payments?

My mortgage lender has sent a foreclosure notice on my home. What are my chances of just working it out with my lender to get extra time to catch up?

How Can Chapter 13 Bankruptcy Help You Save Your Business?

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America was built on the small business owner.  Like everyone else, they may be facing difficult economic times.  Are you one of these people?  Are you earning 50% of what you made a few years ago, causing you to fall behind on both your personal and business obligations? Do you want to keep the business open?   This is where a Chapter 13 personal bankruptcy could be used to save the business and protect it from creditors until profits can be seen. 

You will likely be able to save your business through Chapter 13 bankruptcy if:

1.       You can show that you have income that is “sufficiently stable and regular to enable [the] individual to make payments under a plan under chapter 13” (Section 101(30) of the Bankruptcy Code.)

2.       You can show that you (or you and your spouse) have less than $360,475 in unsecured debts (which means debts with no collateral) and less than $1,081,400 in secured debt (which means debts with collateral). 

3.       Your company is an individual (or sole) proprietorship.  If it is a corporation, limited liability company (LLC) or business partnership, there are other rules related to filing that go beyond the rules for a personal bankruptcy. 

Filing Chapter 13 bankruptcy will help you stay on your feet with your sole proprietorship business, and you will be able to use the filing to deal with your personal and business debts in one shot.  This means that creditors who are harassing you, whether for personal debts or business debts, will be placed under an “automatic stay,” meaning they can’t make any effort to collect against your personal or business assets.  You will be able to keep the important assets needed for your business to run properly without worrying that these will be taken from you through a judgment or lien.

Chapter 13 is an effective way of helping you keep your business if you are facing financial difficulties.  Talking with a bankruptcy attorney is the first step to helping you get back on your feet and keeping your business running as it should.  

401(k) and Retirement: Leave It Alone If You’re Filing For Bankruptcy

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In an effort to avoid bankruptcy,  many people who are falling on times of financial distress will start tapping into their retirement savings to stay afloat and attempt to ward off creditors.  However, this is one of the biggest mistakes you can make for several reasons: first, that money is protected from creditors, even if you file bankruptcy; second, it might be wasted payment since that particular debt could potentially be discharged in a Chapter 7 bankruptcy (or reduced in a Chapter 13 bankruptcy). 

Any money that you have saved for retirement or have placed in a 401(k) program is exempt in a bankruptcy.  This means that these are funds your creditors cannot touch, even if you qualify for a Chapter 7 and your assets are liquidated to pay off your creditors.  Federal bankruptcy laws ensure that this money is protected so that you can (hopefully) avoid bankruptcy in the future and have a solid foundation for rebuilding your life and financial goals.  So if this money is protected from creditors, why would you willingly give it to them? 

Another thing to keep in mind is that if you are tapping into savings that you have put aside for your retirement, something is not right with your budgeting and month-to-month living expenses.  It might work to mend your situation temporarily or get a creditor off of your back for the short-term, but how long can this last?  Even if you are able to use these retirement funds as a temporary fix to your financial situation, what about the long-term outlook?  If you find that you are not able to make ends meet, your first efforts should be in clearing away some debt through bankruptcy (if necessary) and living within a more realistic budget—not taking away from your savings for the future.  These are the best steps to getting back on track financially, and you can take them with your retirement savings intact. 

Top Five Things To Avoid Before Filing Bankruptcy

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If you have plans to file a Chapter 7 or Chapter 13 bankruptcy in the near future, or have already begun the process, you have to begin planning carefully to ensure that the bankruptcy is granted and you’re your financial future will begin on more solid footing once the discharge is complete.  Therefore, there are certain mistakes you should avoid in order to ensure you don’t end up in hot water with the bankruptcy trustee or even have your case dismissed. 

#5 – Stop all use of credit cards

When you know you plan to file bankruptcy and continue to use credit cards (with the intention to avoid paying), that debt could become non-dischargeable.  This is especially true if you purchase items that aren't necessities or luxury items, such as vacations. 

#4—Don’t transfer property

A bankruptcy trustee might ask for details concerning any property transfers made within the past 6 years, particularly focusing on any made within 1 year before filing bankruptcy.  If the trustee finds that the property transfer violates rules relating to the bankruptcy code, that transfer might be voided and the recipient of the property might be forced to return the property to the trustee. 

#3—Avoid repaying money you've borrowed from friends and family

Due to bankruptcy code, any transaction in which you've repaid money that was loaned to you by friends or family could be recovered from the people to which you've paid the money. 

#2—Avoid paying more than $600 to one creditor

In the same sense that money paid to friends and family can be recovered, payments exceeding $600 to any one creditor can also be recovered by the trustee. 

#1—Avoid cashing out on your 401k or retirement plan

Your retirement plan or 401k is protected by the bankruptcy code and if you’ve withdrawn any money from such plans or cashed them in, your trustee will likely void those transactions as preferences.