Posted by Kevin on December 14, 2010 under Bankruptcy Blog | 
Sometimes, I get prospective clients who meet with me to discuss a bankruptcy filing. During the course of our conversation, they mention a debt to a friend or a property outside the United States that they do not want to list. Unless I can convince them not to do this, those “prospective clients” never become clients.
I point out that the Bankruptcy Code is set up to give honest creditors a fresh start. Focus on “honest”. That means that you honestly disclose all your assets and liabilities, and all your income and expenses. The debtor actually signs a declaration under the penalty of perjury that the information contained in the Petition is true and complete.
Usually this Civics class approach (do they call it “Civics” anymore?) works and the client flies right. But some still push. Well, if being a good citizen is not enough for you, think of the consequences. You can go to jail.
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Posted by Kevin on November 30, 2010 under Bankruptcy Blog |
Last week, the Wall Street Journal had an article about how second mortgage holders are putting the kabosh on short sales.
Hedge funds are buying out second mortgages for pennies on the dollar. The second mortgage is underwater. The homeowner can sell the property for less than the amount of the first mortgage. For example, the first mortgage is 300K. The second mortgage is 50K. The owner gets a contract for 275K. Owner contacts 1st mortgagee (lender) for short sale. 1st mortgagee agrees. Done deal? Not so fast.
In steps the second mortgagee. The second mortgage is a lien on the property. Unless that lien is taken care of, the new buyer cannot get title insurance and, therefore, cannot get a mortgage loan. Owner is SOL unless it can take care of the second mortgage.
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Posted by Kevin on November 23, 2010 under Bankruptcy Blog |
Last week, Judge WIzmur came down with a written opinion in Kemp v Countrywide. In that case, Countrywide filed a Proof of Claim which was challenged by the debtor on the grounds that Countrywide lacked standing.
What happened was that Countrywide securitized Kemp’s loan, Bank of New York (BONY) was the trustee and should have possession of the note. But, Countrywide never transferred physical possession to BONY. The Court found that BONY could not be a holder under the UCC because it did not have possession of the note. BAC, the new Countrywide entity, was not a holder since it was the servicer. As servicer, it could file the proof of claim as the agent of BONY. However, since BONY never had possession of the note, it was not the holder and, therefore, could not delegate the task of filing the proof of claim to the servicer.
More of the case details will be posted later this week on my blog at fightforeclosurenj.com.
Posted by Kevin on November 10, 2010 under Bankruptcy Blog |
There has been a lot of press in the last month about so-called “robo-signers” and false affidavits being submitted in both bankruptcy and foreclosure matters. What are the courts doing to combat this?
Many commentators talk in terms of the courts’ right to impose sanctions (usually translated into monetary fines and payment of the non-offending party’s legal fees) but the fact of the matter is that courts are reluctant to impose sanctions.
In the case of In Re Butler, which was a Chapter 13 case in New Jersey, a credit union filed for relief from the automatic stay claiming that the debtors had missed 18 monthly payments on its SUV. The debtors provided proof to the court, by bank statements and wire transfer authorizations, that all payments but one were made. The hearing was postponed. During the interim, the credit union withdrew its motion.
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Posted by Kevin on October 30, 2010 under Bankruptcy Blog |
You bought your house for $300,000 in 1997. By 2003, the value went up to $420,000. You refinanced at $380,000 with an adjustable rate mortgage The value of the house increased to $460,000 by 2005. You wanted to consolidate your credit card debt so you draw down $60,000 on a home equity line (HELOC) in 2006. Things are going all right but then your mortgage adjusts upward and you owe another $600 per month. The HELOC payment goes up too. Then, someone gets sick or loses a job, you miss a couple of mortgage payments. Before you know it, you are in financial trouble. You are thinking about bankruptcy.
If you do file bankruptcy, should it be under Chapter 7 or 13. A Chapter 7 will take care of credit cards and medical bills but can’t do much about the mortgages because they are what is called secured debt. A Chapter 13 can save your house but do you have to make payments on both mortgages? Maybe- Maybe not. Under certain circumstances a Chapter 13 debtor can eliminate that second mortgage.
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Posted by Kevin on October 24, 2010 under Bankruptcy Blog |
Say you bought a car and financed it. The lender will have a lien on the car. You lose your job and file a Chapter 7 bankruptcy. What happens to the car?
Under the new Code, a debtor can elect to do one of three things: surrender the car to the lender; redeem the car for fair market value usually in one payment; or reaffirm the entire debt and continue making payments.
Here is an interesting case involving a surrender of a car. It took place in Maine. That is in a different circuit from New Jersey but the ruling is instructive- that means that the bankruptcy courts in NJ will take heed.
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Posted by Kevin on October 11, 2010 under Bankruptcy Blog |
You are behind on your mortgage 6 months. Your monthly payment, including taxes and insurance, is $3,000 per month. Your lender has filed a foreclosure complaint. What to do? Can filing bankruptcy help? The answer, like most answers involving legal issues, is that it depends. First of all, the filing of any bankruptcy acts as an automatic stay on most efforts to collect a debt including foreclosure. So, if you are facing a sheriff’s sale, the automatic stay will halt that sale. But, for how long?
In a Chapter 7, the stay lasts until the Trustee abandons the property, a creditor obtains relief from the automatic stay from the court, or the earlier of the time that the case is closed or a discharge is granted or denied. A trustee will usually abandon property if he or she determines that there is no equity in the property. That means that the mortgage is greater than the value of the property. This will happen about the time of the first meeting of creditors which occurs about 4-6 weeks after the filing. The trustee sends out a notice of abandonment. If no one objects , then the abandonment is processed by the clerk and notice is sent out to creditors. The whole process takes about 8 weeks and the foreclosure marches on.
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