Bankruptcy may be your best solution to get a fresh start when your unable to pay off your financial obligations. To find out if bankruptcy may be a method to help you stop a foreclosure, we first need to know about bankruptcy and the different kinds that make it applicable to each situation.
An Overview Of Bankruptcy
Bankruptcy is simply defined as the inability of an individual to pay the creditors. Most individuals, who cannot fulfill their financial obligation to the creditors or lenders, file for bankruptcy to wipe the slate clean and get a fresh start. Another definition of bankruptcy is liquidating the assets of the debtor to release them from the liabilities or financial obligations.
There are two kinds of bankruptcy known in any court system. One is called involuntary bankruptcy where the lender or creditor will file the bankruptcy petition against the debtor in court when they’re unable to pay off their debts in full. The reason for this is the lender will simply try to recoup the amount owed to them by the borrower and attempt to get a marginal income from the amount they have invested to the debtor.
Voluntary bankruptcy on the other hand is when the debtor initiates the petition on their own. One reason for this is the inability of the debtor to pay off the amount owed to a creditor or will try to get out of the financial obligation by declaring in court their state of financially difficulty.
Bankruptcy Chapters
There are two kinds of bankruptcy that a debtor can file in court, a Chapter 7 and a Chapter 13 bankruptcy. Each has their own criteria and process that fit within the situation of the debtors position.
A Chapter 7 bankruptcy opts for the liquidation of the said property to cover the debt to the creditor. With this method, the debtor will have some of the proceeds left from the sale of the property to start all over again.
A Chapter 13 bankruptcy on the other hand is simply reorganizing the debts in which the creditor will give 3-5 years for the debtor to pay the amount due.
Be warned that not all debts are covered under bankruptcy; common debts that bankruptcy can be a solution for are credit cards, unsecured loans and medical bills. It’s always best to consult a lawyer or a financial adviser when you plan to use bankruptcy as a solution to your problems.
Qualification
Chapter 7 and 13 bankruptcy is not as easy as filing it out directly in court. Each has its own intricacies and qualifications that fit the situation of the debtor. If you’re willing to loose all your assets in settling your debt then liquidation through Chapter 7 bankruptcy would be your best option.
If the collateral is a business property and the business is still doing well, then it’s best to settle with a Chapter 13. If you’re lucky, you may get an approval along with a five year extension to pay off the full or remaining balance of your debt.
It has been noted in the US government that anyone who has already filed a Chapter 7 or Chapter 13 bankruptcy within the last 6 years is NOT allowed to file the same method again.
If In Doubt, Consult A Professional
If your uncertain which bankruptcy method to choose as the solution for your financial problems, then it’s best to consult a bankruptcy attorney. At KEL Attorneys we can provide insights, as well as suggestions regarding possible solutions to your financial problems.
If bankruptcy is your final option in your situation, then it is best to consult KEL Attorneys to see which bankruptcy option would suit you best. There are certain prohibitions in law stating that even if an individual files for a Chapter 7 bankruptcy, it is quite possible to retain some, if not all, of their assets. So consulting a lawyer is your best option if you wish to make most out of your situation.
Missing your mortgage payment for one month might be acceptable however if you become aware that you will not be able to make future payments, then you must take action fast.
Here are a few helpful tips to avoid a foreclosure:
Recognize Your Problem.
Act as soon as you recognize a problem. The further behind you are, the harder it will be for you to reinstate your loan. Talk To Your Lender As Soon As Possible.
Lenders will offer options to borrowers who are experiencing financial difficulties. These options will help borrowers with temporary financial relief to include reinstatement, forbearance, loan modification and repayment plans. Ask your lender to find out your best option in your case.
Review And Respond To Every Piece Of Mail You Receive From Your Lender.
A foreclosure letter will contain information about the different prevention options you have available to you. Succeeding mail may contain important notices of pending legal actions. Failure to review and respond to the these notices is not excusable in foreclosure court.
Keep Informed Of Your Mortgage Rights
Before you sign mortgage papers, you’re advised to read and understand everything the agreement says. It will contain information about possible actions the lender may do if you have failed to make your payments on time. Now that you ended up in this situation, read the foreclosure laws pertaining to your state. You can contact the State Government Housing Office to find out the time frames.
Consult a HUD-Approved Housing Counselor
HUD-approved housing counselors help you know what options, rights and how to organize your finances. If you need assistance, housing counselors can also represent you during negotiations with your mortgage lender. HUD or the Housing and Urban Development offers free or low cost housing counseling services nationwide.
Spend Wisely
Most Americans wonder why they are still knee-deep in debt even if they fall above the median household income.
The answer: they spend too much.
What you need to do is prioritize your spending. After your health, your next top priority should be keeping your house. Let go of other expenses you can live without like dining out a lot and cable TV.
Tap Your Assets
Assets such as an insurance policy, jewelry and second or third cars can save your house. If you have any of these, you might as well sell them to generate cash to help you save your home. You can also get a second job to pay for your mortgage. Whether or not these actions are enough to reinstate your loan, the lenders can recognize this as an effort that you’re willing to make sacrifices to keep your home.
Lenders are sometimes difficult when it comes to loan modifications. But did you know they benefit at least as much from it as you do? The main reason they balk at Loan Modification is they have to train agents to handle them and each case requires individual attention. However, it also saves them a good deal of time when compared to foreclosure. Some good reasons why your lender might prefer a loan modification over a foreclosure are below.
It’s faster and cheaper. In a foreclosure, there are specific wait times that allow a borrower to get current with their mortgage. It’s not uncommon for the process to drag on for a year. These delays can cost your lender a good deal of money. On the other hand, a loan modification takes an average of 30 to 60 days. All they have to do is go over your documents, talk to your attorney and see if you qualify. The negotiations are the hardest part, but they don’t cost as much as a foreclosure would be.
It’s less work. To start the foreclosure process, your lender will have to assess late charges, file a Notice of Default, pay lawyer fees and arrange an auction to sell your home. If you manage to get back on track and stop foreclosure, all the work simply gets filed away. Loan modifications involve less work. You and your Attorney will do most of the work and provide most of the documentation. Often, all they have to do is assess your case and decide what kind of assistance you will need.
Foreclosures are as damaging to your lender as they are to you. It may benefit them for now, but with the recent housing bubble, it will eventually weigh them down. Investors don’t want to deal with banks that have a lot of foreclosures on record. If they grant you a loan modification instead, your payments will keep showing up on their records instead of being written off as a bad debt.
Obviously this doesn’t make it any easier to get what you want from your lender. After all, you’re still a liability, so it’s important to prove that you can get back on your feet. To get the best loan modification deal, you need a lawyer who knows what lenders need and can convince them that it’s the wiser choice to settle a loan modification. At KEL Attorneys we can assist you in this process.
Under President Obama’s new Home Affordable Mortgage Program (HAMP) guidelines, Americans struggling to make their mortgage payments are given a second chance to save their homes during these tough economic conditions. Unfortunately, there have been many reports of participating lenders neglecting to keep up their end of the promise they made to modify the loans of these struggling families.
Tracy Davis and her husband were victims of such a case. After meeting with a Bank of America representative on October 30th, 2009, the Davis’ were told that they qualify for a loan modification under HAMP guidelines. With the exception of a few calls from a collections center in India, they had not heard anything regarding their loan modification for the next four months.
The Home Affordable Mortgage Program was created in order to keep 3 to 4 million Americans in their homes.
“Federal Statistics show banks are making plenty of offers, but relatively few of those loan changes are being made permanent.” (Berger 1)
In fact, out of roughly 1 million homeowners originally approved for HAMP, only 116,000 have had the new mortgage terms become permanent. The most common occurrence is a trial period of payments that the lender outs the homeowner on. The trial period of modified payments should only last for three months; however lenders are either requiring homeowners to continue making more trial payments after the scheduled 3 months, or are failing to communicate with the homeowners on a permanent modification all together after the trial period is completed.
Tracy Davis and her husband both had steady employment as of late 2006, but an unfortunate turn of events left them both laid off and looking for work. Both took sporadic jobs here and there, and both eventually ended up working at a grocery store for about one third of their original pay. With mortgage payments at $1000 per month, they continue to struggle to make their payments on time. The Davis’ are just one example of the millions of families that are in similar situations. These people need help, and here at KEL, we are dedicated to helping each client who comes to us in their time of need.
In this tough economic climate, The Law Offices of Kaufman, Englett, & Lynd understand that people may be in need of a helping hand. Specializing in foreclosure defense, loan modification, and other areas of the law, the staff at KEL is dedicated to helping clients who are struggling financially. Tonight on WKMG Local 6, Craig Lynd, managing partner at KEL, will discuss in detail the opportunities clients have to save their homes through loan modification and foreclosure defense. Be sure to tune in tonight at 11:00pm to learn more about what you can do to defend your home during these tough times.
February 25th, 2010 in
Foreclosure Defense,
KEL Attorneys,
Loan Modification | tags:
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On February 15, 2010, the Law Offices of Kaufman, Englett, & Lynd were invited to join Mike Holfeld and the action news team of WKMG Local 6 to help spread the word about foreclosure defense and loan modification assistance. As part of the news spots, Matt Englett, managing partner of KEL, and the legal counselors of KEL joined in to take phone calls all throughout the day. In a total of six hours, Mr. Englett and the counselors took over 1500 phone calls and 250 emails from viewers seeking help with their foreclosure action or loan modification. As a part of the action, I had the pleasure of getting the opportunity to listen to and serve hundreds of clients in need of our assistance. Giving each client the chance voice their concerns and find comfort in the form of an action plan that will help solve their financial nightmares is what brought me to this firm, and the breadth of assistance we will be offering from last Monday’s news spots serves as just a small sliver of what KEL is doing to help those that have been affected by this economic downturn.
“Kaufman, Englett and Lynd, a law firm known as KEL, moved into the 15th floor of the Dynetech Centre and purchased the signage rights to the downtown Orlando building.
The firm moved its 125 employees into the 21,000 square foot space formerly occupied by Dynetech Corp. Feb. 8, said Matt Harrison, spokesman for the firm. It has a three-year lease with an option to expand its offices to the 14th floor. He declined to disclose the cost of the lease and signage rights. The broker was Lincoln Property Co.
KEL moved downtown to increase its visibility and be closer to the courthouse, he said. The firm’s former offices were 12,000 square feet at 151 Wymore Road in Altamonte Springs.
Dynetech Corp.’s parent company, Telligenix Corp., said Feb. 5 that it will file a bankruptcy reorganization plan within two weeks, revealing how the firm plans to save itself. The firm’s bankruptcy filing listed more than $50 million in debts on assets of $1 million to $10 million.
Telligenix filed for bankruptcy protection Oct. 8, as it struggled with millions of dollars in unpaid bills and a restraining order that froze access to its assets.
Since then, the motivational seminar business moved from the office tower that bears its name to offices on Lucien Way in Maitland where it now employs 22 people. The company employed 550 workers in 2007.”
-Melanie Stawicki Azam, Orlando Business Journal, February 9th, 2010
The bankers are once again attempting to tilt the system in their favor by trying to turn Florida into a “non-judicial” foreclosure state. What this would mean is that the banks would not have to go through the legal system in order to have a foreclosure sale, which they currently must. My law firm represents thousands of homeowners in foreclosure and we are licensed to practice in several states including California, which is a non-judicial foreclosure state. I have seen how the banks simply steam roll homeowners in California, making no good faith effort to help keep these people in their homes.
Allow me to dispel some of the common misconceptions about foreclosures in the state of Florida. First, it does not take years for a bank to foreclose on a property, which is commonly cited by the media. The truth is, 96% of all foreclosures are actually “uncontested,” meaning the homeowner does nothing to fight the foreclosure and the court simply grants the lender’s request for a foreclosure sale. Second, the courts are inundated with foreclosures, but Florida has increased the filing fee from $300 to $900 (on average), which is more than enough money for the judicial system to hire additional personnel to keep up with and process these complaints efficiently.
Third, when a homeowner does decide to hire an attorney to contest a foreclosure, it is usually for a very good reason. The banking industry had gone unregulated over the past decade and was operating like the Wild West. Banks were routinely violating federal regulatory laws when granting mortgages on real property. The foreclosure cases we have fought for have usually lasted anywhere from six to eighteen months. The reason that it can often take so long, is because the banks are so ineffective at resolving these issues, for which there is no excuse.
Most homeowners in foreclosure desperately want to keep their home, have invested much of their life savings in it and are willing to make mortgage payments if they can. When you take the legal system out of the foreclosure process, you take away any obligation or willingness by the banks to help the people that need it the most. Making Florida a non-judicial foreclosure state would be a major victory for the banks’ bottom lines, and a terrible defeat for the homeowners of Florida.
Throughout our nation, the rate of foreclosures is steadily climbing, with particular severity in the Sunbelt states. Over the past year, the top 20 metropolitan areas for foreclosure rates are all located in the Sunbelt region. States holding the majority of foreclosures include Nevada, Arizona, California, and Florida, with the Orlando area reaching as high as number 7 on the metropolitan list for 2009.
At the end of 2009, Orlando netted a foreclosure rate of 8.2%, which translates to one in every twelve homes receiving a filing for foreclosure. The total number of filings was 72,141, which is a 54% increase from 2008’s total.
Factors such as high home prices, poor lending practices by brokers and financial institutions, and a high unemployment rate have contributed to the large increase in foreclosed homes, and the most severely impacted counties include Lake, Orange, and Seminole, with Lake county leading the way with 7791 filings (a 65.3% increase).
Although the economy is beginning to grow again at a slow pace, the rate of foreclosure actions filed will continue to increase as long as the unemployment rate remains high and new opportunities for employment remain scarce (Reuters). During these difficult economic times, KEL Attorneys continues to take the fight back to the lenders on behalf of the consumer.
Last Saturday KEL Attorneys was featured in a cover story in Saturdays edition of the Orlando Sentinel. Please read the article below.
By Mary Shanklin Orlando Sentinel
January 16, 2010
William and Lida Negron don’t know the details of a $75 billion federal program designed to protect homeowners such as themselves from foreclosure.
The senior citizens know only that they have tried to get new terms for their mortgage but now face losing the southeast Orlando-area house they bought three years ago at the peak of the market.
“I was talking to my father yesterday,” said Carlos Negron, their son, “and he’s at the point where he’s about to turn in the house. He’s an elderly person, and it’s so much stress on him.
And my mother has been to the hospital twice because of this.”
The Negrons are among about 600,000 homeowners across the country who have hit a dead end with the trial mortgage modifications they received through the federal government’s Making Home Affordable program. Orlando had the 11th-highest rate of mortgage modifications of U.S. metro areas in December, with 15,516 homeowners in trial modifications and 1,400 who have permanent new mortgage terms, according to a new federal report released this week.
Here’s how the 10-month-old program is supposed to work: Banks reduce certain customers’ monthly mortgage payments, often by cutting the interest rates, for a three-month trial. If the homeowners make their payments on time, the banks are supposed to convert the temporary loan terms into long-term modifications, which may involve extending the 30-year loans’ terms to 40 years.
Treasury Department officials initially estimated that more than half of the trial deals would become permanent. But as of the end of October, fewer than 5 percent had been converted, according to a Congressional Oversight Panel’s report released last month.
“I’m not really sure why the banks are not making these modifications permanent,” said Matt Englett, of the Altamonte Springs law firm Kaufman, Englett and Lynd, which represents thousands of foreclosure cases. “We have a lot of clients who have met the criteria — they have gone through the three-month trial period, and now they’re just sitting and waiting.
Our take on this is: The taxpayers bailed out the banks, and now the banks are bailing on the taxpayers.”
Englett said his firm plans to file lawsuits against a half-dozen lenders that are not giving their customers a permanent solution even when those homeowners successfully complete their three-month trials.
Last month, the U.S. Treasury Department drew hundreds of local homeowners to a Making Home Affordable foreclosure-prevention workshop in Orlando, one of the top 10 metropolitan areas in the country for foreclosures. Participants met with a representative from their mortgage company to discuss getting a trial or a permanent mortgage modification.
One south Orange County man at the workshop said that, even though he had made timely payments for three months on his trial mortgage modification, he received a foreclosure notice Nov.19 on the home he had bought three years earlier for $156,000 in the giant Southchase development.
Reasons the trial modifications are not becoming permanent remain unclear. Treasury officials reported to the Congressional Oversight Panel in September that they would have more a more accurate assessment of the program by the end of March.
One issue, officials have said, is that homeowners sometimes do not file the paperwork necessary to make the loan changes permanent. Because of such hang-ups, the Treasury Department approved a two-month extension of the trial modifications launched before Sept.1, 2009. The program’s success rate improves to 38 percent for trial modifications converted within five months, as opposed to a 4.7 percent success rate for three-month trials.
For the Negrons, the terms their bank offered them for a permanent loan modification were untenable.
When the couple — who said they had near-perfect credit scores before William Negron lost his car-sales job about two years ago — got into a trial modification last year, it dropped their mortgage payment from $2,000 a month to $1,280 a month. But the permanent loan modification would have extended payments on the 30-year loan for 10 more years and would have required a $25,000 balloon payment in 15 years — when William Negron would be approaching his 90th birthday.
“That was a major slap in the face,” said Carlos Negron, the couple’s son. The Negrons own a second home, which they rent out for income.
Perhaps the larger problem facing the Negrons and thousands of other Central Florida homeowners at risk of defaulting on their mortgages is that they are struggling to stay current on houses now worth a fraction of what they paid for them several years ago. The Congressional Oversight Panel, created by lawmakers in 2008 at the height of the global financial crisis, criticized the Treasury program last month not only for being slow in converting trial loan modifications but also for not addressing the fact that 23 percent of all homeowners now owe more on their homes than the properties are worth.
Derrick Bennett, a Pine Hills homeowner stuck in a trial modification, has lost much of his income from detailing vehicles for auto dealers. He said he is struggling to pay his trial mortgage payment of about $1,200 a month, even though it’s down sharply from his old monthly payment of $2,000.
He said he paid $120,000 for his home 11 years ago but now sees similar houses down the street selling for less than $43,000. He has never missed a house payment, he said, but now it’s tough to know what to do.
“It would be hard to start over,” he said.
Mary Shanklin can be reached at 407-420-5538 or mshanklin@orlandosentinel.com.
Copyright © 2010, Orlando Sentinel.
January 21st, 2010 in
Foreclosure Defense,
KEL Attorneys,
Loan Modification | tags:
Foreclosure,
Foreclosure Defense,
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