Category Archives: Bankruptcy

Why Financial Planning is the Key to Saving Your Home from Foreclosure

28 Wednesday May 2014

Posted by in Bankruptcy, Foreclosure Crisis, Foreclosure Defense, Pro Se Litigation, Your Legal Rights

≈ Leave a comment

Many homeowners who found themselves in the unfortunate situation of mortgage loan default often wonder, if they could have prevented it.

The best foreclosure prevention takes place before you purchase a property — whether it be a primary residence or an income property. Proper financial planning, including creating a budget and performing disciplined research, should enter the equation long before escrow even opens.

Many people learned this valuable lesson much too late during the most recent market cycle and bubble burst. They bought more house than they could rightly afford, signed on using questionable financial instruments to pay for it, and as a result faced the possibility — and in many cases the eventuality — of foreclosure.

From the loss of a job or the drain of equity in the property (going negative or “underwater”), to divorce or a major medical crisis, an individual’s or family’s funds can be depleted rather quickly, forcing them to make a choice between which bills to pay and which ones to hold off on. In many situations the ultimate choice comes down to a decision between paying the mortgage, the credit cards, or keeping food on the table. In any case, it’s not an enviable position to be in.

While many of these situations are unforeseeable, the best thing to do with what is many people’s most costly asset is to be proactive and try to prevent the possibility of foreclosure ahead of time.

There are a number of reasons why a property owner could be facing foreclosure. Given the correct set of circumstances, any one of them could lead to financial hardship, causing the owner/borrower to miss making mortgage payments and leading to the lender initiating the foreclosure process.

Create a Budget and Stick to It

It may be an old saying, but living within your means is the most prudent way property owners can protect what is in many cases their most expensive asset. Too many property owners went into foreclosure during the last cycle because they treated their home or income property as an ATM, pulling cashing out their equity to buy cars, pay for vacations, buy furniture, renovate their home, or to pay college tuition for their children.

When you’re borrowing hundreds of thousands of dollars to purchase property, you need to make sure the financial numbers add up before you move forward. A proper budget creates a structure that prioritizes your monthly finances so that you spend your money on what is most important. It protects you from wasting your cash on whims and ending up short on the items that are critical, like your monthly mortgage payment.

Financial planners typically recommend a six-month savings cushion, meaning you should be able to continue to make all your financial commitments for six months if your income is completely cut off. That’s a great rule of thumb, but many people find it tough to get there because their monthly income is already stretched to the limit.

Still, if you want to drastically lower the risk of ever defaulting on your mortgage payments or losing your home to foreclosure, it’s critical that you build some savings into your budget. Even if it’s just a few dollars a month, be disciplined about setting aside cash for that rainy-day fund. If you end up saving enough for six months, funnel those monthly savings toward paying down extra principal on your mortgage (assuming your mortgage does not have a pre-payment penalty).

What can be done to avoid foreclosure?

Even the best planning and budgeting can’t always stave off unforeseen circumstances. Whenever a property owner finds him or herself in a position where those circumstances turn to financial hardship, the best thing to do is to call the lender right away. Report the circumstances to the lender (not the company servicing the mortgage since all they are is a debt collector).

Ask the lender what can be done to avoid going into foreclosure. There may be alternatives to foreclosure available that could make a difference in terms of to what extent the owner/borrower’s credit history is affected, if at all.

From a loan modification and principal reduction, to the lender approving a short sale or accepting a deed in lieu of foreclosure, the option chosen can make a difference as to the future availability of credit to the borrower.

DON’T file for bankruptcy protection

Many people are under a false impression that they can save their home and other assets simply by filing for bankruptcy protection. Nothing could be further from the truth.

The bankruptcy laws were not put in place to shield people from anything bad happening to them. To the contrary, one must think long and hard about filing for bankruptcy before hiring a bankruptcy attorney and proceeding with the process. Like a foreclosure, bankruptcy stays with you on your credit report for years to come, so it is not a step to be taken lightly.

Most importantly, bankruptcy does NOT either prevent or avoid foreclosure, it can only delay it…at best. At worst, the foreclosing lender could convince the judge to allow the foreclosure to proceed right away without granting even a temporary stay. In any case, all the defaulting borrower has done is delayed the inevitable.

Foreclosure Prevention

The biggest lesson to take away from the most recent foreclosure crisis is that many of the foreclosures that took place from 2007 through 2012 could have been prevented with proper financial planning. And the best plan to start with is a proper budget.

There are plenty of budgeting software programs out there for tech savvy consumers to upload to their computers. And for those who aren’t into computer programs, there’s nothing wrong with a legal pad and a pen to start outlining a family budget. Put down your monthly gross income, your monthly expenses, and leave plenty of room for unexpected expenses which will most certainly arise.

It’s never too late to get started!

However, if you have already found yourself in the unfortunate foreclosure proceeding, your best option at this point is to defend and protect the equity in your home!

Home owners should wake up TODAY! before it’s too late by mustering enough courage for “Pro Se” Litigation (Self Representation – Do it Yourself) against the Lender – for Mortgage Fraud and other State and Federal law violations using foreclosure defense package found at http://www.fightforeclosure.net “Pro Se” litigation will allow Homeowners to preserved their home equity, saves Attorneys fees by doing it “Pro Se” and pursuing a litigation for Mortgage Fraud, Quiet Title and Slander of Title; amongst other causes of action. This option allow the homeowner to stay in their home for 3-5 years for FREE without making a red cent in mortgage payment, until the “Pretender Lender” loses a fortune in litigation costs to high priced Attorneys which will force the “Pretender Lender” to early settlement in order to modify the loan; reducing principal and interest in order to arrive at a decent figure of the monthly amount the struggling homeowner could afford to pay.

If you find yourself in an unfortunate situation of losing or about to lose your home to wrongful fraudulent foreclosure, and need a complete package that will show you step-by-step litigation solutions helping you challenge these fraudsters and ultimately saving your home from foreclosure either through loan modification or “Pro Se” litigation visit: http://www.fightforeclosure.net

Six Most Effective Ways For Homeowners to Stop Foreclosures

25 Sunday May 2014

Posted by in Bankruptcy, Banks and Lenders, Federal Court, Foreclosure Defense, Judicial States, Litigation Strategies, Loan Modification, Non-Judicial States, Pro Se Litigation, State Court, Your Legal Rights

≈ Leave a comment

In recent years, many homeowners found themselves in difficult financial situations that requires serious round the table decision making.

Anytime a homeowner runs into financial trouble dire consequences can enter into the equation. That is especially true when it comes to foreclosure of the home that was used to secure the debt owed to the lender who is now foreclosing to get title to the property back.

However, there are several methods that homeowners in financial distress can use to stop foreclosure fast. Some methods require money, while others require agreement to forgo money by the lender or through the court system using the complete foreclosure package found at http://www.fightforeclosure.net

Here’s 6 steps to take that can help stop the foreclosure process dead in its tracks:

Step 1: Don’t Panic.

Most households have a surprising array of assets that can be used to make payments and delay foreclosure. Unemployment insurance, disability insurance and savings are each potential cash sources. Household budgets can be slashed. Big, expensive cars can be traded in for cash. Retirement funds are often available — but be aware that withdrawals may result in penalties and additional income taxes.

Step 2: Late and Missed Payments.

If problems cannot be delayed or deferred, and if mortgage payments will be late or unpaid, then you MUST contact the lender as soon as possible.

At this point your goal is to help the lender create a “workout” agreement that effectively modifies your mortgage so that the foreclosure can be stopped before going to completion.

Step 3: Look at Workout Options.

Once you enter into discussions with a lender or a “servicer” — the company that services the loan for an investor — any number of options are open. While lenders are typically NOT required to modify loan arrangements, many will. The usual choices include:

Loan Modification: “This option should be considered when the borrower experiences difficulty making regular mortgage payments as a result of a permanent or long-term financial hardship,” says Liz Urquhart with AIG United Guaranty, a leading private mortgage insurance company. “Reducing an above-market interest rate to a market rate and/or by extending the original terms of the note may enable the borrower to continue making payments. Permanent interest rate reductions appeal most to borrowers, but even a temporary rate reduction of one to three years can provide substantial help.”

 

  • Repayment plans: Say you must miss a payment and that each payment is $1,000. With a repayment plan you might pay $1,075 a month until the missing money is repaid.
  • Reinstatement: Imagine you missed two or three monthly payments. With a reinstatement, or what is also known as a “temporary indulgence,” you bring your loan current, pay late fees and other costs, and the loan continues as before.
  • VA Refunding. If you have a loan backed by the Department of Veterans Affairs, the VA may buy the loan from your lender and take over the servicing. If you have the ability to make mortgage payments, but your loan holder has decided it cannot extend further forbearance or a repayment plan, you may qualify for refunding, according to the VA.
  • FHA loans: If you financed with a loan guaranteed by the Federal Housing Administration, call 1-800-569-4287 or 1-800-877-8339 (TDD) to reach a HUD-approved housing counseling agency for assistance and advice.
  • Forbearance: This is a temporary change in mortgage terms, such as the right to skip a payment or make smaller payments for a year or less.
  • Private mortgage insurers. Mortgage insurance companies typically require lenders to begin foreclosure proceedings once a delinquency reaches 150 days or when a sixth missed payment is due. However, such requirements may be waived in areas impacted by natural disasters and for other reasons.
  • Claim advance: If you bought with less than 20 percent down then either the loan is self-insured by the lender or you have private mortgage insurance (PMI). In some cases PMI companies will provide a cash advance to bring the loan current — money which is sometimes interest free and need not be repaid for several years.
  • Disasters: Most lenders, but not all, will provide substantial relief in the face of hurricanes, earthquakes and other terrible events. Typical measures include a suspension of late fees, no late payment reports to credit bureaus, a pause in foreclosure actions and modified payment schedules. To get such benefits you must contact the lender as soon as possible after the disaster.
  • Re-amortization: In this case your missed payment is added to the loan balance. This brings your account current. However, says Saccacio, “since your debt has increased, future monthly payments may be larger unless the lender agrees to lengthen the loan term.”
  • Deed in Lieu: The deed-in-lieu would allow you to sign over legal ownership to your home for the lender’s agreement not to foreclose.
  • Short Sale: An arrangement where the lender accepts less than the mortgage debt in satisfaction for the entire loan amount. Also called a “compromise agreement” with VA loans. Be cautious: Saccacio says in some instances money not repaid may be regarded as taxable income. Also, lenders in some cases may sue to recover any shortfall.
  • Bankruptcy: When all other options are exhausted many homeowners consider bankruptcy as a last resort to save their home. Unfortunately, in most cases bankruptcy only delays the inevitable; in the  worst case it can actually speedup the process.
  • Full Blown “Pro Se” Litigation (Self Representation – Do it Yourself) –for Mortgage Fraud using foreclosure defense package found at http://www.fightforeclosure.net which will allow you to stay in your home for 3-5 years for free without making a red cent in mortgage payment.

 

Step 4: Refinance the Loan.

Since 2001 millions of loans with new formats have been issued, permitting low monthly payments for the first several years of the loan term and then much higher monthly payments thereafter.

If you have a loan where soaring payments are a certainty, don’t wait to refinance. Do it now while you have a strong credit profile and no missed payments.

Step 5: Sell the Property.

In some situations there is no workout or refinancing option which can save a property. If a job is lost, medical payments are overwhelming, or mortgage payments are rising to the point of bankruptcy the only plausible choice may be to sell the property.

If the situation is getting worse every month, you have to protect your interests and sell the property. This is a hard choice  but if you sell before foreclosure you will get a better price for the property and preserve your credit standing.

Most importantly, remember that there still are options, but you have to act quickly. Also, never rule out seeking out foreclosure assistance like using the package found at http://www.fightforeclosure.net to fight the lender for mortgage fraud among others.

If you find yourself in an unfortunate situation of losing or about to lose your home to wrongful fraudulent foreclosure, and need a complete package that will help you challenge these fraudsters and save your home from foreclosure either through loan modification or “Pro Se” litigation visit: http://www.fightforeclosure.net

 

Caution to Homeowners About Bankruptcy Foreclosure

25 Sunday May 2014

Posted by in Bankruptcy, Federal Court, Foreclosure Defense, Judicial States, Loan Modification, Non-Judicial States, Pro Se Litigation, State Court

≈ Leave a comment

Many Homeowners sometimes wonder about what their options are when they defaults on their mortgage loans and what possible options they might have with Bankruptcy.

There’s not enough money at the end of all the bills you have to pay. You need one more paycheck to make ends meet. Costs of living keep going up and your monthly paycheck isn’t keeping up with the price of gas, the cost of food and everything else you value in your life. You can’t save anything because all your money goes to paying bills and supporting yourself and/or your family. And then . . .

One day you receive a piece of paper in the mail called a “Notice of Default” or a process server hands you a “Lis Pendens.” Either way, both are bad news because they mean your lender has initiated foreclosure proceedings against you (in either a non-judicial or a judicial foreclosure state respectively) because you owe back payments — typically three months worth. . . or more.

And then you start thinking, “Maybe I could cheat fate by filing for bankruptcy. That will wipe out all my debts. I can stop the foreclosure, keep the house, and the lender can’t do anything about it.” Well, think again!

If you file for personal bankruptcy under Chapter 7 a so-called “automatic stay” is placed on all your creditors, including the foreclosing lender, by the court. HOWEVER, the stay is only a temporary fix to the situation.

Chapter 7 never permanently stops home foreclosure. It only gives you relief from unsecured creditors like credit cards and prevents certain creditors from pursuing collection action against you. It does NOT discharge debts such as taxes, child support, alimony or student loans, nor can it give you relief from other secured creditors — like your lender — whose debt is secured by the home you’re living in.

In fact the “automatic stay” is only effective so long as the court wants it to be in place. At any time the court can grant your lender’s motion for “relief from the automatic stay.” Once the court grants that motion the foreclosure against your home can proceed to conclusion.

One viable exception does exist, however, by filing for a Chapter 13 bankruptcy. Under Chapter 13 you are allowed to sit down with your creditors and arrange a payment plan to pay back what you owe them over a given length of time and usually on a lower payment schedule. Once accepted, the creditors, like your lender, must abide by the terms of the plan.

Call it financial reorganization or a workout plan, any way you look at it Chapter 13 is a good way to save your home from foreclosure, and can indeed stop foreclosure so long as you continue to make the payments agreed to under the plan until all debt owed is totally paid off.

In essence, then, through a Chapter 13 debt reorganization plan you can cure the default and save your home. However, you must realize up front that not everyone qualifies to file for bankruptcy. There are certain threshold qualifications that must be met which were tightened up when the U.S. Bankruptcy Code was revised a few years ago.

Additionally, there are court costs to be paid, AND, of course, the homeowner must hire an attorney who is going to want to get paid too!

If you find yourself in an unfortunate situation of losing or about to your home to wrongful fraudulent foreclosure, and need a complete package that will help you challenge these fraudsters and save your home from foreclosure either through loan modification or “Pro Se” litigation visit: http://www.fightforeclosure.net

What Homeowners Needs to Know About Proof of Claim in Bankruptcy Proceedings

12 Monday May 2014

Posted by in Bankruptcy, Federal Court, Foreclosure Defense, Judicial States, Litigation Strategies, Non-Judicial States, Pro Se Litigation, Your Legal Rights

≈ Leave a comment

A. General
1. Except in Chapter 11 cases, in which certain scheduled claims are “deemed filed” a creditor desiring to receive distributions in a bankruptcy case must file a timely proof of claim.

2. A proof of claim is a written statement that sets forth the creditor’s claim. It must conform substantially to Official Form 10, which can be found in the Bankruptcy Rules. While completing the proof of claim form is not difficult, it must be done carefully to avoid mistakes that could give the trustee or the debtor grounds to defeat the claim.

3. In most cases, the Court will have sent to creditors a proof of claim form with the initial Notice of Commencement of Case.

4. With the implementation of mandatory electronic case filing (ECF) in most districts, proofs of claim must be filed electronically if filed by counsel, unless the lawyer has obtained an exemption.

B. Definition of Claim
1. A “claim” in bankruptcy is defined as:
“(A) a right to payment, whether or not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or
(B) a right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. 
2. A “Debt” is defined in bankruptcy as “a liability on a claim.” 
3. Claims “arise” for bankruptcy purposes when all “transactions” or acts necessary for liability occur. 
4. A claim arises regardless of whether the claim is contingent, liquidated, or matured when the petition is filed. 

C. Filing Proofs of Claim
1. As noted above, proofs of claim must substantially conform to Official Form 10.
2. The creditor or the creditor’s agent must sign the proof of claim. 
3. Copies of the documents evidencing the claim, and evidence of perfection of any security interest claimed, must be attached to the proof of claim. 
4. The bar date establishes the date by which proofs of claim must be filed against the estate. The bar date is similar to a statute of limitations and must be strictly observed. 
5. For non governmental creditors, claims must be filed within 90 days after the first date set for the meeting of creditors. The bar date for governmental claims is 180 days after the date of the order for relief. 
6. In Chapter 11 cases, the court fixes the bar date for filing proofs of claim and notice of such deadline must be given to all creditors and parties in interest. 
7. A creditor may seek leave for an extension of time to file a late proof of claim due to inadvertence, mistake, or carelessness amounting to “excusable neglect” as well as due to intervening circumstances beyond the parties’ control. 

D. Secured Claims
1. “Secured claims” include “liens,” “security,” “security agreements” and “secured claims.” 
2. An allowed claim secured by a lien on property in which the estate has an interest, or that is subject to setoff, is a “secured claim” to the extent of the value of the creditor’s interest in the estate’s interest in the property, or the amount subject to setoff. A secured claim carries the right to “adequate protection” of collateral. 
3. Secured creditors are not required to file proofs of claim. The secured creditor holding a pre-bankruptcy lien need not file a proof of claim to preserve its status as a secured creditor, and the lien will pass through the bankruptcy case unaffected regardless of whether the secured creditor files a proof of claim. When there is a pre-petition arrearage, the secured creditor may wish to file a proof of claim to establish its claim for treatment in a Chapter 11 or 13 plan. Similarly, where the claim is only partially secured, the creditor may wish to file a proof of claim to establish a claim for the unsecured portion of its debt.
4. Common Mistakes
a. Failure to provide proof of debt. Rule 3001(c) requires that evidence of all claims based on a writing be filed with the proof of claim form. Most claims have some documentary evidence that should be filed with the proof of claim.
b. Misuse of check boxes. Official Form No. 10 contains boxes to check only for secured and priority claims. An unsecured claim without priority status under the Bankruptcy Code is the default, and there is no box to check for unsecured, non-priority claims. Creditors should only claim secured or priority status if there is a good faith basis to do so.
b. Failure to provide proof of perfection of security interest. The nature of the proof required depends upon the requirements for perfection of a security interest in the underlying collateral. For example, the creditor should provide copies of certificates of title for motor vehicles and manufactured homes, a copy of the recorded deed of trust for real estate, and copies of the recorded UCC-1 financing statement(s) for security interests in other personal property. If the documentation is lengthy, a summary may be provided.
c. Improper claim of priority status. Priority claims as prescribed by the Bankruptcy Code are paid before other claims, which is a considerable advantage. Creditors often claim priority status when they are not legally entitled to do so. A creditor should not file a proof of claim form alleging priority status without a good faith basis to do so.
d. Late Filed Claims. With few exceptions, claims filed after the bar date are subject to disallowance. Creditors who learn of a bankruptcy filing should file promptly a proof of claim even if they do not receive official notice from the Court.
e. Failure to indicate amended claim. Duplicate proofs of claim are a recurring problem for bankruptcy trustees. The proof of claim contains a box to check if a proof of claim replaces or amends a previously filed proof of claim. Creditors often file replacement or amended proofs of claim without checking the “replace” or “amends” box. This creates obvious confusion because it is not clear whether the latest claim is a new, separate claim. If the box is not checked, the debtor or the trustee may object on the grounds that one of the claims is a duplicate of the other, and an inattentive creditor may find that the preferred claim is disallowed. Checking the “amends” or “replace” box makes it clear that there is only one claim. It may be helpful to explain the reason for the amendment on the face of the proof of claim or in an attachment.

E. Allowance of Claims and Objections
1. If a proof of claim is timely and properly filed, it is “deemed allowed” unless a party in interest objects. 
2. Claims scheduled as undisputed, fixed or liquidated in Chapters 9 and 11 are deemed allowed even if no proof of claim is filed. 
3. A “party in interest” may object to the proof of claim. The objection becomes a “contested matter.” If the objection is joined with a demand for relief of the kind specified in Bankruptcy Rule 7001, it becomes an adversary proceeding. At least 30 days notice of a hearing is required on an objection to a proof of claim. 
4. Once filed, a proof of claim constitutes “prima facie evidence of the validity and amount of the claim”. As a result, the party objecting to a properly filed proof of claim has the initial burden of presenting sufficient probative evidence to overcome the prima facie effect of the proof of claim. 
5. Once the objector has produced “sufficient evidence to place the claimant’s entitlement at issue”, the burden of proof then shifts to the creditor to establish the validity and amount of its claim. The claimant bears the ultimate burden of establishing a valid claim by a preponderance of the evidence. 
6. Neither the Bankruptcy Code nor the Bankruptcy Rules establish an absolute deadline for filing an objection to a claim. In Chapter 7 cases, objections should be filed prior to any distribution by the Chapter 7 trustee. In Chapter 11 cases, the plan of reorganization will often include a deadline to object to claims.

F. Effect of Filing a Proof of Claim.
1. A proof of claim supersedes the claim as scheduled by the debtor. 
2. A claim is “deemed allowed” unless and until an objection is filed. 
3. Only creditors holding allowed claims are entitled to vote on the confirmation of a Chapter 11 plan of reorganization. If a party objects to a claim prior to the claimant voting on a plan of reorganization, the claimant is ineligible to vote on the plan. On request of the claimant, the Bankruptcy Court, after notice and a hearing, can temporarily allow the claim for voting purposes in an amount that the Bankruptcy Court deems proper. 
4. A creditor must hold an allowed claim in order to receive a distribution under a Chapter 7, a Chapter 13, or a Chapter 11 bankruptcy case. A properly executed and filed proof of claim establishes a creditor’s allowed claim, unless a party in interest objects. 
5. There is some risk for a creditor in filing a proof of claim because the creditor is generally deemed to have submitted itself to the jurisdiction of the Bankruptcy Court for purposes of the claim and issues related to the treatment and payment of the claim. This may not be desirable in all circumstances. It may result in a waiver of the right to a jury trial.

G. Objections

(1) An objection to claim is a “contested matter” under FRBP 9014. Except to the
extent otherwise provided in this rule, an objection to claim must comply with
LBR 9013-1 and be titled “Motion for Order Disallowing Claim” unless the
objection is to become an adversary proceeding pursuant to FRBP 3007(b).
(2) A claim objection must include the number, if any, assigned to the disputed claim
on the court’s claims register.
(3) A separate objection must be filed to each proof of claim unless:
(A) The objection pertains to multiple claims filed by the same creditor;
(B) The objection is an omnibus claim objection; or
(C) The court orders otherwise.
(4) An omnibus claim objection asserts the same type of objection to claims filed by
different creditors (e.g., claims improperly filed as priority claims, duplicate claims,
claims filed after the bar date, etc., as described in FRBP 3007(d)). In addition to
the requirements set forth in FRBP 3007(e), an omnibus claim objection must:
(A) Identify the name of each claimant and the claim number in the caption of
the objection; and
(B) Include as exhibits the documents supporting each claim objection
organized and indexed by claim number.
(5) If more than 20 objections in a case are noticed for hearing on a single calendar,
the objector must comply with the supplemental procedures contained in the Court
Manual available from the clerk and on the court’s website.
(b) Notice and Hearing.
(1) A claim objection must be set for hearing on notice of not less than 30 days.
(2) The claim objection must be served on the claimant at the address disclosed by the claimant in its proof of claim and at such other addresses and upon such parties as
may be required by FRBP 7004 and other applicable rules.
(3) Notice of the objection on or conforming to court-mandated form F 3007-1.3,
Notice of Objection to Claim must be served with the claim objection. The notice
must advise the claimant of the date, time, and place of hearing, and state:
(A) A response must be filed and served not later than 14 days prior to the date
of hearing set forth in the notice; and
(B) If a response is not timely filed and served, the court may grant the relief
requested in the objection without further notice or hearing.
(4) The court will conduct a hearing on a claim objection to which there is a timely
response.
(5) If the claimant timely files and serves a response, the court, in its discretion, may
treat the initial hearing as a status conference if it determines that the claim objection involves disputed fact issues or will require substantial time for presentation of evidence or argument.
(6) If the claimant does not timely file and serve a response, the court may sustain the
objection and grant the motion for order disallowing the claim without a hearing.
(A) The objector must file a declaration attesting that no response was served
upon the objector. The declaration must identify the docket number and filing date of the objection to claim, notice, and proof of service of the notice and objection to claim, and be served on the claimant.
(B) The objector must also lodge a proposed order prepared and served in accordance with LBR 9021-1 which provides for service of the entered order on the claimant and counsel, if any, and the United States trustee.
(c) Evidence Required.
(1) An objection to claim must be supported by admissible evidence sufficient to
overcome the evidentiary effect of a properly documented proof of claim executed
and filed in accordance with FRBP 3001. The evidence must demonstrate that the
proof of claim should be disallowed, reduced, subordinated, re-classified, or
otherwise modified.
(2) A copy of the complete proof of claim, including attachments or exhibits, must be
attached to the objection to claim, together with the objector’s declaration stating
that the copy of the claim attached is a true and complete copy of the proof of
claim on file with the court, or, if applicable, of the informal claim to which
objection is made.
(3) If the complete proof of claim is not readily available from the court file, the
objector may formally request a copy from the holder of the claim by serving the
creditor with a notice in substantially the same form as court-approved form.

H. Notice of Request for a Copy of Proof of Claim.
F 3007-1.2, Notice of Request for a Copy of Proof of Claim.
(A) The request must advise the holder of the claim that failure to supply a complete copy of the proof of claim, including all attached documentation, within 30 days of the notice may constitute grounds for objection to the claim based on the claimant’s failure to provide requested documentation to support the claim.
(B) If an objection is filed on this basis, it must be accompanied by a declaration providing evidence that the proof of claim was not readily available from the court file or otherwise.
(4) If the basis for the objection is that the proof of claim was filed after the bar date,
the objection must include a copy of each of the following:
(A) The bar date order, if any;
(B) The notice of bar date; and
(C) Proof of service of the notice of bar date.
(5) If the basis for the objection is that there are duplicate proofs of claim, the objection must include a complete copy of each proof of claim.

If you find yourself in an unfortunate situation of losing or about to your home to wrongful fraudulent foreclosure, and need a complete package that will help you challenge these fraudsters and save your home from foreclosure visit:http://www.fightforeclosure.net

How Homeowners Can Effectively Challenge Lender’s Proof of Claim in Bankruptcy Adversarial Proceedings

11 Sunday May 2014

Posted by in Bankruptcy, Federal Court, Foreclosure Defense, Fraud, Judicial States, Litigation Strategies, Non-Judicial States, Pro Se Litigation, State Court, Trial Strategies, Your Legal Rights

≈ Leave a comment

Many Homeowners who find the need to file a Chapter 13 Bankruptcy years after lenders has failed to modify their mortgage loans may find the needs to pursue the unscrupulous lenders through the  the special proceeding in the Bankruptcy law called “Adversarial Proceeding”.

When Homeowners in Chapter 13 Bankruptcy listed their lender as “Unsecured Credit”, the burden of proof usually shift to the creditor to show how its claims against the borrower is secured. Doing so, requires that the lender present the necessary documentary proof and then ascertain how it came about acquiring those payment rights or the right to institute and maintain foreclosure action against Homeowner’s property.

When lenders are listed as “Secured Creditors”, even though the word “secured” made it appear as if the lender has all the rights in the world to pursue the foreclosure, absolutely not. The bankruptcy law requires that all claimants listed on the Chapter 13 Bankruptcy timely file what is called a “proof of claim”, as to their entitlement for the interest they were claiming. Whether or not such “proof of claim” is timely filed by the lender determines how its interest if any, is going to be protected when the Trustee distributes the money. However, if Homeowners commenced what is know as “Adversarial Proceeding” within that Chapter 13 Bankruptcy proceedings, then lenders are forced to substantiate their claims. This is the point where all events in the mortgage loan transaction comes to light including but not limited to “assignments and transfers, possession of deeds of trust, mortgage or notes, recordings in the county, MERS issues etc. The burden thus still shifts to the lender to show how it came about with the rights of ownership or enforcement it is claiming against Homeowner’s property.

Ordinarily, the first step a creditor will take upon learning of a debtor’s bankruptcy case is to file a proof of claim to seek payment of money owed. A claim or interest that has been filed with the court will be allowed, and will serve as the basis for distribution of the creditors claim, unless a party in interest objects. Once filed, a proof of claim constitutes prima facie evidence of the validity and amount of the claim. Often times months or even years will go by before a creditor hears anything further about his claim from the debtor, trustee or any other party. Consequently, an objection to a claim may be brought long after the claim was filed. There is no absolute deadline in the Code or Rules for filing an objection to a claim. In Chapter 7 cases, objections should be filed prior to any distribution by the trustee and in Chapter 11 cases, oftentimes the plan of reorganization will include a deadline to object to claims. Typically, a claim objection is preceded by a letter requesting additional documentation from the claimant by the debtor or trustee.

If a Trustee or Debtor files an objection to claim, the objection becomes a “contested matter.” If the objection is joined with a demand for relief of the kind specified in Bankruptcy Rule 7001 (governing adversary proceedings), it becomes an adversary proceeding. At least thirty days notice of a hearing is required on an objection to a claim. Once an objection has been filed, the burden of proof shifts to the creditor to prove the amount and validity of the claim. The claimant bears the ultimate burden of establishing a valid claim by a preponderance of the evidence.

Filing a successful proof of claim is the key to unlocking a creditor’s right to recover against a debtor in bankruptcy. Only in limited circumstances may a creditor recover against the debtor’s estate without properly filing a proof of claim. This article addresses the various stages of filing, attacking and defending a proof of claim.

A proof of claim is “a written statement setting forth a creditor’s claim.” To aid creditors, the judiciary has created an “Official Form” for filing proofs of claim that comply with the Bankruptcy Code and Rules. The deadline for filing proofs of claim is fixed by the Bankruptcy Court.

The proof of claim serves to give notice to the Bankruptcy Court, the debtor-in-possession/trustee, and other interested parties of the creditor’s claim. Beyond alerting others to the existence of the claim, it also begins the process of establishing the amount of the claim, by requiring the creditor to specify the amount owed as of the petition date. Finally, the proof of claim identifies thetype of claim, such as whether it is a secured or unsecured claim, and any priority asserted by the creditor. The proof of claim is therefore more than just a “written statement” of the creditor’s claim, but also the opening salvo in the creditor’s attempt to obtain a distribution from the debtor’s estate which must be completed with care.

The Official Form requires a claimant to describe its claim as an unsecured or secured priority claim. Claims receive different treatment under the Bankruptcy Code, depending upon the priority, and accordingly, this required designation is more than a technicality. A secured claimant who has perfected a security interest in a particular piece of collateral is entitled to receive a distribution from that specific property before any other creditors can recover from that specific property. If the claim is unsecured, the Bankruptcy Code establishes a schedule of “priorities” giving the order in which unsecured claimants are paid back, based on the type of claim, until the debtor’s estate is exhausted. As a few examples, priority unsecured claims (in order) include domestic support obligations; wages, salaries and commissions; consumer deposits; and other unsecured claims.

More basic requirements for filing a proof of claim include a signature by the creditor or its authorized agent. Further, if the claim is based on a written document, the creditor should file a copy of the document; or if the document is no longer available, the creditor should explain how it came to be lost or destroyed. If the creditor possesses a security interest in the debtor’s property, the creditor should include evidence of the security interest’s perfection.

While the ultimate burden of persuading the Bankruptcy Court that the claim is valid always rests with the claimant, once a creditor files a proof of claim complying with these rules, the proof of claim becomes “prima facie evidence of the validity and amount of the claim.” If left unchallenged, the creditor will be entitled to receive distributions from the debtor’s estate in order to satisfy its claim. As courts have recognized, this effectively shifts the burden to objectors to present evidence casting doubt on the claim, with such evidence carrying at least equal evidentiary force as the details in the proof of claim. However, the objector having done so, the burden returns to the claimant to demonstrate the ultimate validity of its claim.

The Bankruptcy Code and Rules allow for a “party in interest” to object to the proof of claim. Such objections must be written and filed with the Bankruptcy Court. The objector must also serve a copy on the claimant at least 30 days before the hearing on the objection. The objector should also make it clear that this is an objection to a proof of claim filed in the case and specify which proof of claim is affected.

One typical tactic that objectors employ is the so-called “omnibus objection,” resulting from the fact that many claims are vulnerable to objections on the same basis. As a consequence, objectors will often set forth a general legal basis for a reduction or elimination of particular claims, and then attach as an exhibit a list of claims to which the objection applies. For example, claims that were filed late-that is, they were filed after the claims filing deadline, are often the subject of a so-called “omnibus objection.”

Before 2007, this type of objection posed additional challenges to claimants. It was often difficult for claimants to know whether they had been named in the objection because the Bankruptcy Rules did not require objectors to list claims in alphabetical or numerical order, meaning that a creditor could easily miss that its proof of claim was being challenged among the hundreds or even thousands of claims named in just a single omnibus objection. This required a careful inspection of the attached exhibit to determine if its claim was affected.

Seeing the need to impose limits on such unwieldy objections, the judiciary amended the Bankruptcy Rules to make omnibus objections more accessible to creditors. First, the amended Bankruptcy Rules allow omnibus objections only on limited grounds, including duplication, claims that were filed in the wrong case, amended claims, late claims and other procedural objections.

Other than circumscribing when an objector can employ an omnibus objection, the Bankruptcy Rules now also detail how the objection can be made, with the ultimate goal of making it easier for creditors to determine whether one of their claims has been named. The omnibus objection must list claimants alphabetically (and additionally list them by category of claims if appropriate) and provide a cross-reference to claim numbers. For each claim, the objector must state the grounds of the objection and cross-reference the pages in the omnibus objection pertinent to the stated grounds.

An omnibus objection must also explain, “in a conspicuous place,” that claimants receiving a copy of the objection should find their names and claims therein. These rules prohibit objectors from naming more than 100 claims per omnibus objection. Finally, the title of the objection must state the objector’s identity and its ground for objection and be numbered consecutively with the objector’s other omnibus objections.

The objection may assert the claim is not reflected in the debtor’s books and records, the amount of the claim or classification of the claim is incorrect or other grounds specific to the nature of the claim. Creditors have difficulty where the objection to their claim is not explicitly specific to their claim, as it may be combined with dozens of other claims in an Omnibus Objection. Often an Omnibus Objection results from having many claims that are vulnerable to objections on the same basis and thus, will contain the basis of the Objection and a corresponding list or chart identifying the creditor’s claim to which the objection applies.

At this point, it may be beneficial for the creditor to hire experienced bankruptcy counsel to defend their claim. If a timely response is not given to the objection, the claim will likely be disallowed and thus, the creditor receives nothing from the bankruptcy estate, despite having had a valid claim. If a timely response is filed, the Bankruptcy Court will conduct an evidentiary hearing to establish the validity of the claim, along with its amount as of the petition date. The hearing is usually scheduled when the objection is filed. The Court may however establish a discovery schedule prior to the hearing if the claim dispute so requires. Ordinarily, if an objection to a claim is raised, the court (after notice and a hearing) determines the amount of the claim as of the date of the filing of the bankruptcy petition, and allows the claim, unless it deems it not allowable under Section 502, such as a claim that is unenforceable due to a valid defense and a claim for post-petition interest on an unsecured claim.

Of course, if no objection is made, the creditor will be entitled to receive distributions from the debtor’s estate in order to satisfy its claim.

After an objection is filed, the creditor is required to submit a written response. If a timely response is filed, the Bankruptcy Court will conduct an evidentiary hearing to establish the validity of the claim, along with its amount as of the petition date. Often, the hearing is scheduled at the time the objection is filed; however, depending upon the size and nature of the claim, the court may establish a discovery schedule prior to the hearing. The court will generally look to non-bankruptcy law to determine whether to allow the claim.

The proofs of claim process demonstrates how important it is that the respective parties get their roles right. Creditors must be diligent in properly filing a proof of claim to recover from the debtor’s estate and in carefully filling out the Official Form to ensure that their claims are properly characterized and quantified. A party in interest must make a cogent objection to the proof of claim sufficient to overcome its presumption of validity and take heed of recent changes to the rules governing omnibus objections.

If you find yourself in an unfortunate situation of losing or about to your home to wrongful fraudulent foreclosure, and need a complete package that will help you challenge these fraudsters and save your home from foreclosure visit:http://www.fightforeclosure.net

How Chapter 13 Bankruptcy Can Help Homeowners Save their Homes

03 Thursday Apr 2014

Posted by in Bankruptcy, Foreclosure Defense

≈ Leave a comment

There are numerous options in chapter 13 Bankruptcy that can help home owners retain their homes.

Chapter 13 bankruptcy is normally used to catch up on past due mortgage payments, car payments, or taxes. Chapter 13 does everything a Chapter 7 does but has some additional benefits.

How It Works

In Chapter 13 Bankruptcy, in addition to the bankruptcy petition, statements, and schedules, the individual files a “Chapter 13 Plan” with the bankruptcy court agreeing to make the best effort to pay off as much debt as affordable over a three to five year period of time. The Plan will classify debts in different categories such as secured and unsecured debts. Some debts, such as taxes and secured debts may be paid in full while others may only be paid a portion of the amount owed. In many cases, unsecured creditors do not receive any payment. Understanding who gets paid and how much in a Chapter 13 Plan can be confusing because every person’s case is a little different and one small detail about a certain type of debt can make a big difference in how it’s treated in the Chapter 13 Plan.

After the bankruptcy documents are filed with the court, the individual will begin to make a monthly payment to a bankruptcy trustee. The monthly payment is determined in a number of ways. There is both a floor and a ceiling to the payment amount. The floor is determined by simply adding together all the things that the individual wants in the Plan to what is required to go in the Plan (mortgage arrearage, property taxes, auto loans, administrative costs, etc) and figuring out the minimum it takes per month to pay everything off in the 36-60 month time frame. The ceiling is determined in the same way, only determining the amount needed to pay everything including unsecured debts. The great thing about Chapter 13 is that a borrower will never pay back more than what is owed!

From there, a complex calculation (aka the Means Test) is done to determine if the individual can afford to pay any amount above the floor. For most people however, this calculation says that they can not afford to pay back any extra and the floor is the Plan payment amount. For some that are fortunate enough to have high-paying jobs, it may be determined that there is extra money, and they may be required to pay back some or all of their unsecured debt. Therefore, their payment would be in between the floor and ceiling. The Plan payment is capped at the ceiling (all of the debt.)

Even if that made sense, one can see that things are complicated. Most questions about Plan payments are answered by “it depends.” Fortunately, a Plan payment is something that we can calculate using provided information before filing. Usually, individuals save hundreds per month month. Hundreds add up to thousands and thousands saved feels pretty good!

Chapter 13 Costs

While we try to be competitive and fair in our fees. Each case is treated individually. On average, the total fee charged for a Chapter 13 can start at $3000 in a basic case and go upward from there. We understand that most people who need to file bankruptcy are cash-strapped, so we often only require a small down-payment, and the balance of the attorney’s fee is paid through the Chapter 13 Plan.

The total cost of filing a Chapter 13 Bankruptcy will depend on how complex the case will be, and whether the individual is filing individually or jointly, married without the spouse filing, or as a business. The Court charges a filing fee of $281. Another required cost is taking a required credit counseling before the case is filed which will cost from $15 to $40. Some people also may choose to purchase a credit report which can range from $0 to $50.

Some law firms charges based on factors such as:

      • whether the individual is a below or above median household;
      • the number of creditors;
      • the number and type of assets;
      • potential non-dischargeability issues;
      • extent of tax debt;
      • complexity of Chapter 13 Plan.
Pros and Cons

Advantages of Chapter 13 Bankruptcy

Chapter 13 Bankruptcy, in some circumstances, can offer significant advantages. The main advantages are:

      • More debts are dischargeable in Chapter 13 Bankruptcy than in Chapter 7 Bankruptcy;
      • Non-dischargeable debts can be repaid through the Chapter 13 Plan (these include back taxes and child support). In many cases the monthly payment required will be substantially less than the creditor, such as the IRS, was requiring prior to the filing of the bankruptcy.
      • In a Chapter 13 bankruptcy, an individual can keep property that is not exempt and would have been liquidated by the Chapter 7 Trustee.
      • In a Chapter 13, many secured debts can be reduced to the value of the property involved. This is called a “cram-down.” For example, if an individual owes the bank or finance company $10,000, but the car which is the collateral for the loan is worth $7,000, the secured creditor will be paid the $7,000 plus interest through the Plan. In the majority of cases, the interest rate paid through the Plan is substantially lower than what was being paid before the bankruptcy was filed.
      • A Chapter 13 can stop auto repossessions and home foreclosures and allow an extended period of time to pay these items, instead of having to catch up all at once outside of bankruptcy.

Disadvantages of a Chapter 13 Bankruptcy

While Chapter 13 Bankruptcy can offer some real advantages to an individual, there are significant disadvantages as well:

      • Chapter 13 Bankruptcy cases now come under greater scrutiny from the Court and from the Trustee. This is not a reason not to file a Chapter 13 Bankruptcy though. The very foundation of the Bankruptcy Code is to provide relief for the honest person.
      • A person in a Chapter 13 Bankruptcy cannot sell any property without approval from the court.
      • A person in a Chapter 13 Bankruptcy cannot borrow any money without approval from the Chapter 13 Trustee.
      • A Chapter 13 Bankruptcy case requires a person to be “in bankruptcy” for at least three years, whereas a Chapter 7 Bankruptcy case is normally concluded in three to four months.
      • Lump-sum distributions such as personal injury and worker’s compensation settlements are considered future income and, if not exempted, may be considered as disposable income and may have to be turned over to the Trustee to disburse to unsecured creditors. There may be exemptions available for a portion or all of a personal injury or workers compensation settlement depending on the particular case facts.
Stop Foreclosure

Missing a mortgage payment if there is any other option is one of the worse things that a homeowner can do, especially if it is a reasonable mortgage payment and equity exists in the house. Always pay a mortgage before paying unsecured debt. If there is a loss of income, try refinancing a car, have a garage sale, and do everything possible to stay current. If this has happened, there is still hope. It’s possible to catch up on past due mortgage payments through a Chapter 13 bankruptcy. This allows to repay the past due amount (the arrearage) over up to five years usually at zero interest.

That sounds good, but is there a catch? Sort of—the homeowner has to be able to stay current on future mortgage payments. As part of the Chapter 13 process, the debtor presents a Plan for catching up and a budget that demonstrates the ability to afford both the Chapter 13 payment and the future mortgage.

This works in the majority of cases if there is stable income going forward. Chapter 13 may also lower car payments and eliminate unsecured debt payments (assuming paying unsecured debt is unaffordable).

No one should wait until the last minute to seek out help, though. Even if there is no foreclosure notice yet, once income is stable, it may be necessary to file the bankruptcy and begin catching up. If someone waits until the account is referred to a foreclosure attorney, there will be substantial additional charges for attorney’s fees. The case must be filed before the foreclosure sale in order to save the home. Unlike some other states, in States such as Texas, there is no right of redemption or right to reclaim the home after the sale. If there is a valid foreclosure, and the case was filed before the sale, the home is gone.

Stop Repossession

Similar to foreclosure, it’s a bad idea to get behind on car payments if there’s any other choice. If there is equity in the car and the payments are reasonable, do everything possible to stay current. However, this may not apply if there are multiple cars and one or more is not absolutely necessary. We live in a time where every person with a driver’s license has his own car. If there is a scenario where it may be possible to live without the extra car, the person should consider surrendering it and getting out from under the debt (and payment!)

However, if a car becomes behind, even a single day (and certainly months behind), the creditor is probably within their rights to repossess the vehicle. Repossession is the infamous scene from Hollywood with the tow truck backing up to the vehicle in the driveway and pulling off with the owner’s personal possessions still inside! This is certainly a stressful and embarrassing scenario to live through.

Threat of repossession is removed with bankruptcy. The automatic stay (the fancy word for making the creditors stay put!) protects an individual from any collection activity whatsoever, including repossession. If an auto loan creditor is indicating that the car is going to be “sent to repossession,” that means a bankruptcy needs to be filed immediately. Hopefully, a person in this situation would have already reached out to a bankruptcy attorney.

Luckily, and unlike foreclosure, there is a right of redemption period for vehicles that are repossessed. Typically, an individual has a few days to file a bankruptcy after a car is repossessed to get the vehicle back. Assuming the creditor follows the procedures required under the law, once the vehicle is sold, it is too late.

Catch Up on Debt

Chapter 13 is really great at catching up on important debts. The most popular debts including in a Chapter 13 Bankruptcy “reorganization” is the amount behind on a mortgage or an auto loan. However, there are some less common debts that a Chapter 13 can help an individual catch up on. Among these debts are property taxes on a home, child support, and in some instances, student loans.

Property taxes in Texas can be burdensome, especially if they are not escrowed through the mortgage payment and are paid directly each year. Property taxes can range from hundreds to thousands of dollars, and are due every January. This large lump sum can be difficult to pay when the time comes. Chapter 13 can be very useful at including any past due property taxes in a Chapter 13 Plan and repay the amount over 3 to five years at a reasonable interest rate.

Past due child support can also be paid in a Chapter 13 Plan. Similar to taxes, the State that administers the past due child support is a “Super Creditor” and can garnish wages rather severely, which can be utterly unaffordable. Paying the past due child support over 3 to 5 years can be the most affordable option.

Payment of student loans, in some circumstances, can be included in a Chapter 13 Plan when all other unsecured debts are being paid as well. We refer to this scenario as a 100% Plan. The 100% is referring the the amount of unsecured debt being paid–all of it. If the vast majority of the unsecured debt is student loans, then it could be a good option to include the student loans in the Chapter 13 Plan. This is a rare solution, however, because for most recently issued “government backed” student loans, there is an income-based repayment option that is cheaper than the payment under the Chapter 13 Plan.

The Hearing

Often called a “341 meeting” or “Meeting of Creditors”, the hearing will take place about a month after filing the case (more specifically, as little as 21 days and up 50 days after.)

Hearings dates and times are usually chosen by the Court a few days after the case is filed. The Court gives a minimum of 21 days notice before the hearing date. Each hearing is assigned a specific time, like 9:15am or 2:00pm depending on Jurisdiction.

The people at the place of the hearings are other individuals waiting for their hearing, their attorneys, and the Trustee, along with his staff. The hearings take place in the Chapter 13 Trustee’s office in Federal building of any given City where the Bankruptcy was filed. Also, “Meeting of Creditors” is a slight misnomer because creditors seldom ever show up.

Chapter 13 hearings are slightly different than Chapter 7 hearings in that the Trustee is different and the place is different.

The attorney attends the hearing with the client and is present the entire time. One of the Trustee’s staff will ask a series of questions relating the debtor’s finances and their bankruptcy petition and schedules The entire hearing will usually last from 5 to 30 minutes.

In some States, the Chapter 13 Trustee offer a free “Debtor Education” course. This course is required to receive a discharge and costs around $15-20 if not taken with the Trustee. Homeowners are encouraged to attend this meeting because they get to meet the staff of the Trustee and learn more about the workings of a Chapter 13 Bankruptcy. The Trustee’s staff will give tips and tricks that will ensure a successful case. This course is scheduled the same day at the hearing for convenience.

The Discharge

A Chapter 13 Discharge comes after the Plan is completed–no surprise. There are several instances that a Plan could be determined to be “complete.” Most commonly, it is after the final payment of the Chapter 13 Plan.

In a textbook Chapter 13 case, the individual makes their Plan payments, has no other financial blunders, and finishes the term of Plan, whether that be 36 months, 60 months, or somewhere in between. Once they have made the final payment, the Trustee begins a process that takes 60-90 days to complete. This process includes verifying all the financial data, ensuring all creditors were paid properly, and all requirements have been met. After he completes this, he recommends a Discharge to the Judge. The Judge will then issue the Discharge and begin closing the case. The debtor will receive the Order of Discharge within a few days of the Judge signing. Freedom from debt can now be enjoyed!

Possible Issues

Fortunately, a Chapter 13 is a little more flexible than a Chapter 7 as far as the issues that may arise. It is still critically important to disclose all assets, debts, and any information that the bankruptcy petition inquires about.

An issue that is an increasing problem with the poor economy is infeasibility. Infeasibility is a fancy term for “can’t afford it.” A Chapter 13 can catch up on mortgage payments, and that’s fantastic, but what if the mortgage itself is larger than the individual’s total income? Does the Chapter 13 really help any? Well, not really. A Chapter 13 is great a reorganizing debts, but its obviously not great at increasing income. Sometimes, income is the greater issue, not the debt. This situation calls for some hard decision making and thorough advice from a knowledgeable attorney. No one wants to live a life on the hamster wheel. Sometimes, we need to jump off the wheel to actually get anywhere.

Your Next Step to Debt Relief

Whether your financial situation makes bankruptcy a good option or there is another alternative to solve your debt issues, the next thing you should do is get a free consultation from an experienced Bankruptcy Attorney. While our program has details on how homeowners can use Bankruptcy to save their homes Pro-Se. We have to be Honest to struggling homeowners. Bankruptcy is not something you would want to do on your own. An experienced attorney will discuss your case and review the best solutions with you. There is no obligation to pay anything, and this consultation will give you the knowledge you need to move forward with whatever decision you make.

If you find yourself in an unfortunate situation of losing or about to your home to wrongful fraudulent foreclosure, and need a complete package that will help you challenge these fraudsters and save your home from foreclosure visit: http://www.fightforeclosure.net

What Homeowners Needs to Know About Chapter 13 Bankruptcy

02 Wednesday Apr 2014

Posted by in Bankruptcy, Federal Court, Foreclosure Defense, Judicial States, Non-Judicial States, Pro Se Litigation

≈ 1 Comment

In chapter 13 Bankruptcy, homeowners can use the Bankruptcy proceeding known as “Adversarial Proceeding” to challenge the lender’s authority to enforce or collect the mortgage payments. In most cases, the mortgage loan have been securitized and the assignments were not done in accordance of the law. That is when the Bankruptcy laws that in place in Chapter 13 is designed to protect the homeowners. However, due to numerous changes in the Bankruptcy laws, not all homeowner could meet the “means test” required to retain their homes under Chapter 13 which could lead to a conversion to chapter 7 for liquidation of assets to pay creditors. When homeowners with income could show that they could pay certain bills even if they did not have enough to pay all, the Bankruptcy laws were there to protect the homeowner. Once the Chapter 13 is filed, then the homeowner could use “Bankruptcy Adversarial proceeding” to challenge the Lenders’ authority to collect the debt. When the lenders fails to prove their standing in the mortgage loan transaction, their rights to collect payments from the borrowers were therefore not met and the Bankruptcy judges usually sanctions them for that and in certain cases may outright dismiss their cases which could result to the homeowner owning the property free and clear.

Homeowners should have know that using the Bankruptcy option to save their homes also means that they may give up their rights to sue in the State or Federal Jurisdiction to collect damages for the violations and wrongs done in their mortgage loan transaction as damages are not awarded in the Bankruptcy courts. Reasons being that “you can not sues the same defendants in different jurisdictions using the same set of facts” The keyword here is (“The same set of facts”). So whatever the allegations you are going to make to save your home for mortgage law violations to collect damages in State or Federal courts are most likely the same allegations you will make in the adversarial proceedings in the Bankruptcy court. Therefore, the lenders well paid Attorneys will most likely challenge those sets of facts in their motion to dismiss on the new jurisdiction you filed. That is why Bankruptcy is usually reserved as the last option to “save  the home” but without monetary damages, so smart homeowners seeking to collect monetary damages in the State or Federal court as well as saving the home usually start on those courts. However, the problem is that waiting for a few years before proceeding with Bankruptcy chapter 13 to save the home means that the homeowner should be able to make both the payment of the current mortgage, as well as the portion needed to bring the past due payments current. For Example if a homeowner missed 3 years of payment on a $2500/mth mortgage. The homeowner would have owed $90,000 ($2500×36), in the past due payments, then when in Chapter 13 Bankruptcy, the homeowner will then take the “means test” in order to be able to meet both $2500/month payment plus additional ($1500/month payments ($90,000 divided by 60 months), plus other payments needed to pay other secured and unsecured creditors such as car loans, student loans, back taxes and credit cards etc. The Bankruptcy trustee administrative fees that will also be included in the plan for that 5 years of your plan will amount to approximately $27000. Homeowner also must be current in all taxes meaning that all taxes must have been filed in order to determine if you owe extra taxes than needed to be included in your chapter 13 plan. The last 4 years is mandatory before the judge will approve the plan. You may also request an extension for 120 days in order to file those taxes.
It is important however to note that there are more favorable laws in the Bankruptcy jurisdiction than in the Federal and State jurisdiction and homeowners needs to be aware of that. Bankruptcy Judges are now becoming lenient towards homeowners in default and in order to help keep homeowners in their homes, many BK judges have forced the lenders to modify the loans they had refused to modify for years. (Bankruptcy judges looks at the case as “Borrowers that recognize their delinquency and needed to reorganize their debt and pay those debt only to Bona Fide Creditors”.), some state courts depending on where you are located has similar views. However, Federal courts only address federal questions and in most cases approach the case with a view that a (“Borrower defaulted on a mortgage or failed to pay his/her mortgage, but rather wish to seek for a free home using mortgage law violations in the federal jurisdiction). There is a big difference between these views that is why most federal judges frown on home owners unless you can proof that you know “exactly what you are doing” then it raises their curiosity towards your case as a pro-se litigant, but you must have the rights allegations in your complaint to succeed or you have a better chance having your case thrown out.
Chapter 13 bankruptcy divides debts into several categories. How much you must pay on each type of debt differs. General unsecured claims in Chapter 13 Bankruptcy are those debts that are not secured (examples of secured debts include mortgages and car loans) and not deemed as “priority” by bankruptcy law (examples of priority debts include child support and certain incomes tax debts).

For the most part, you must pay 100% of your secured and priority debts (there are some exceptions). This is not the case with nonpriority, unsecured debts. How much you must pay to your general unsecured creditors in Chapter 13 bankruptcy depends on several factors.
• Disposable income. You must devote all of your disposable income to your plan — so what your unsecured creditors get depends on how much money you have left over each month after paying expenses, secured debts, and priority claims.
• Best interest of the creditors. In addition, at a minimum, your unsecured creditors must get what they would have received had you filed for Chapter 7 bankruptcy.
Disposable Income – How Much You Can Afford?
In Chapter 13 bankruptcy, you must devote all of your “disposable income” to repayment of your debts over the life of your Chapter 13 plan. Disposable income is what you have left over at the end of every month after you pay your reasonable and necessary living expenses. Your disposable income first goes to your secured and priority creditors, and the remainder is split among your unsecured creditors.
The court determines your disposable income first by reviewing your means test, then by reviewing your income and expense schedules.
What is the means test? When you file for Chapter 13 bankruptcy, you fill out a “means test” form, which calculates your income based on the six-month period prior to the month you filed bankruptcy. The test compares your average income to the median income of others in your county or state of the same household size.
If your income is higher than the median. If your income is higher than the median, you must complete the entire means test, taking deductions for certain expenses, including secured debt payments such as car payments and mortgages. The result will show a monthly figure which, multiplied by 60, will decide how much your unsecured creditors will receive over the life of your case.
If your income is lower than the median income. If your income is lower than the median, you do not have to complete the rest of the means test, and your disposable income is based on your income and expense schedules. When you file Chapter 13, you will also file a Schedule I, which lists your actual monthly income from all sources, and a Schedule J, which lists your actual monthly expenses. Reasonable and necessary living expenses include items such as rent, groceries, utilities, cable, pet care, gas, and insurance. The difference between your income on Schedule I and your expenses on Schedule J will be your Chapter 13 plan payment. Your unsecured creditors will receive whatever percentage that income yields after other secured and priority creditors are paid.
Best Interest of Creditors: The Hypothetical Chapter 7
The “best interest of creditors” test calculates the minimum amount you must pay to your nonpriority unsecured creditors through your Chapter 13 plan. If you can’t repay this minimum amount, the court will not confirm your Chapter 13 plan (which means you can’t proceed with your case).
The best interest of creditors test figures out how much your creditors with nonpriority, unsecured claims would have received had you filed for Chapter 7 bankruptcy. You must repay these creditors at least this much in your Chapter 13 bankruptcy. The idea is that creditors should not be disadvantaged just because you filed for Chapter 13 rather than Chapter 7 bankruptcy.
How much your unsecured creditors get in Chapter 7.

A Chapter 7 bankruptcy is a liquidation; if you have any property in a Chapter 7 case that you cannot exempt, the Chapter 7 trustee can sell the property and pay your creditors with the money. However, bankruptcy law allows Chapter 7 debtors to protect some of their property through exemptions. Exemptions allow you to keep certain property up to a certain value. If you have property that the bankruptcy exemptions don’t protect (called nonexempt property), the value of this property goes to the bankruptcy estate and will be distributed to your unsecured creditors.

The minimum amount your unsecured creditors get in Chapter 13. The Chapter 13 trustee will look at what your unsecured creditors would have received in Chapter 7, and then make sure those creditors get at least this much through your Chapter 13 plan.

Example. Say you own a car worth $10,000 and you can only exempt $3,450. The nonexempt value is $6,550. If you had filed Chapter 7, hypothetically the trustee would have sold your car, paid you your exemption, and paid the remaining $6,550 to your general unsecured creditors pro rata. That means that in your Chapter 13 case, your general unsecured creditors must receive, as a group, at least $6,550. Each creditor will receive a percentage of that amount, depending on the amount of its claim.

How Much Do You Have to Pay Nonpriority Unsecured Creditors?
When completing the Chapter 13 means test, you must provide your average monthly income for the six-month period prior to filing for bankruptcy. You then compare your average income against the median state income for a household of the same size. How much you must pay nonpriority unsecured creditors depends on whether your income is above or below the state median.
If You Have Below Median Income
If your income is below the state median, you are not required to complete the entire means test form. As a result, a monthly disposable income figure is not calculated. Essentially, if you are below median, the court assumes that you have no disposable income and your plan payment is primarily based on your budget. This means that the bankruptcy court will usually approve your Chapter 13 plan even if you are paying little or nothing to your nonpriority unsecured creditors. In addition, your plan can be only three years long instead of five.
Example. Brian is single and makes $35,000 a year. The median income for a single person household is $45,000 in his state. Since Brian’s income is below median, he does not have to complete the entire means test form and may end up paying nothing to nonpriority unsecured creditors.
If Your Income Is Above the State Median
You must complete the entire means test form if your income is above the state median. To calculate your monthly disposable income, the means test uses national and local standards for most living expenses. However, you are also allowed to deduct your actual expenses for certain items such as your mortgage, taxes, and health insurance. If you have a positive monthly disposable income figure, you multiply it by 60 to figure out how much you must pay nonpriority unsecured creditors in your plan. This is because above median debtors are required to be in a five-year bankruptcy plan.
Example. Emily and Brad are married and have a combined annual income of $90,000. Their state has a median income of $60,000 for a household of two. After completing the means test, their monthly disposable income is determined to be $500. Since they have to be in a five year (60 month) bankruptcy plan, they would have to pay nonpriority unsecured creditors at least $30,000 ($500 multiplied by 60) over the course of their Chapter 13.
If you find yourself in an unfortunate situation of losing or about to your home to wrongful fraudulent foreclosure, and need a complete package that will help you challenge these fraudsters and save your home from foreclosure visit: http://www.fightforeclosure.net