Debt Help Forum

Will Bankruptcy Stop Foreclosure Of My Mortgage Loan?

2009-07-09T07:35:00.000-07:00

Bankruptcy will delay foreclosure temporarily, but will not stop or terminate it altogether. If you file for bankruptcy, the foreclosure will be “stayed” in the State Court. Normally, the mortgage bank then files a motion in the bankruptcy court that requests that it be allowed to proceed with the foreclosure. In most instances, the motion will be granted, and the bank will be allowed to remove the home from the bankruptcy and proceed with the foreclosure. A homeowner remains responsible for paying the mortgage. A bankruptcy does not relieve the homeowner from the responsibility to pay his or her mortgage.

If homeowners are behind on their mortgage, they may choose to file a Chapter 13 bankruptcy. A Chapter 13 bankruptcy allows the homeowner to catch-up the arrearage by paying it over the term of the of the Chapter 13 Plan, which is 3 – 5 years in length. As long as the homeowner continues to make his or her monthly payment to the Chapter 13 Trustee while the Plan is in effect, when the Plan is completed, the arrears are caught-up and the homeowner may remain in the home. While the Chapter 13 Plan is in effect, in addition to making the monthly Plan payment to the Trustee, the homeowner must resume making the regular mortgage payment to the bank, each month. Homeowners must decide if they are able to afford to file Chapter 13 bankruptcy. A Chapter 7 bankruptcy does not afford the same opportunity as a Chapter 13 to save a home from foreclosure. If homeowners are behind on their mortgage payments, and they file a Chapter 7, the bank will be able to proceed with the foreclosure. However, upon successful discharge of the homeowner following the Chapter 7, the bank can not sue the homeowner for and deficiency owed on the loan account.

Regardless, of what type of bankruptcy a homeowner files, the important thing is to act quickly in seeking legal help. There are many misleading advertisements out there that promise help to homeowners who fall behind on their mortgage. Seek qualified legal help in your area as soon as a problem arises.

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Is My Bank Required To Modify My Mortgage Loan?

2009-07-08T05:44:00.000-07:00

July 8, 2009 · Leave a Comment

There are some government regulations that require that a bank consider modifying a delinquent loan, but there is no requirement that a bank agree to modify a loan that is in foreclosure. In fact, it is reported that banks are renegotiating only 3% of delinquent mortgages. Why? It may seem that banks would be better off keeping a homeowner in the home in order to earn the interest charged on the loan account. However, national statistics indicate that mortgage foreclosures continue to rise. As it turns out, proceeding with the foreclosure, obtaining possession of the home, and selling it, is to the bank’s benefit. What the banks are learning is this: in 30% of the cases where homeowners fall behind on their mortgage, the homeowners are able to “cure” the delinquency by paying the arrears in full. No modification is made. The mortgage resumes upon the same terms as it had prior to the default. In 30% – 45% of the cases where banks have modified loan terms to allow delinquent homeowners to catch-up mortgage arrears, the homeowners end up “redefaulting”, falling into arrears again, only to have the foreclosure resume.

There are ways a homeowners faced with foreclosure can save their home. It is important to act quickly if you fall behind in your mortgage payments. The sooner a homeowner takes action, the more likely it is that the home may be saved. If a bank begins to speak with you about modification, it will likely lead nowhere. While a homeowner may believe a modification is forthcoming, or at least being considered, the foreclosure will most likely proceed in court. It lulls the homeowner into believing that a modification is possible, when it fact, it is very unlikely. And then, the homeowner is surprised to learn that the foreclosure judgment has been entered, and a sale date set. Don’t let this happen to you! Take action now.

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2009-04-24T15:08:00.000-07:00

Will I Be Taxed On The Balance Forgiven If My Home Is Foreclosed?

April 24, 2009 · No Comments

Normally, debt forgiveness results in taxable income. But under the Mortgage Forgiveness Debt Relief Act of 2007, taxpayers may exclude debt forgiven on their principal residence if the balance of their loan was $2 million or less. Details are on IRS Form 982 and its instructions, are now available on the IRS Web site.

This relatively new law applies to debt forgiven in 2007, 2008, and 2009. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief. The debt must have been used to buy, build or substantially improve the taxpayer’s principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.

Borrowers whose debt is reduced or eliminated receive a year-end statement (Form 1009-C) from their lender. By law, this form must show the amount of debt forgiven and the fair market value of any property given up through foreclosure.

For additional questions regarding this new law, call attorneys Smith & Weer. We’ll be happy to answer any questions you may have.

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The Loan Modification Bill is Scheduled to be Debated Next Week

April 24, 2009 · No Comments

The following is from a recent New York Times column:

Holding Up the Housing Recovery

We welcomed President Obama’s plan, unveiled in March, to head off foreclosures and keep more Americans in their homes, but we feared that it wouldn’t be enough. We were particularly concerned that without a reform of the bankruptcy code, lenders wouldn’t do enough to voluntarily modify troubled loans.

Seven weeks later, bankruptcy reform legislation is stalled in the Senate because of Republican opposition. Meanwhile, foreclosure filings — including notices of default, auctions and repossessions — rose again in the first three months of this year.

Moody’s Economy.com is projecting that 3.4 million homeowners will default on their mortgages in 2009 and 2.1 million will lose their homes. Those projections may prove too rosy because they assume that the Obama plan will be largely successful. That’s far from assured.

The plan establishes industrywide guidelines for modifying troubled loans. And it provides financial incentives to lenders to rework those loans so that they’re more affordable, generally by reducing the interest rate.

It also calls on Congress to amend the bankruptcy code so that borrowers facing foreclosure can have their mortgages modified under court protection. That is key.

Lenders are more likely to voluntarily modify bad loans if the alternative is to lose control of the process to a judge. Bankruptcy also may be a borrower’s only hope if a lender will not rework a troubled mortgage or if a borrower cannot afford even modified terms.

Without the bankruptcy fix, foreclosures will likely outstrip lenders’ efforts to prevent them. The Obama administration projects that its plan will help three million to four million homeowners to avoid foreclosure by lowering monthly payments. The Moody’s Economy.com analysis estimates that up to two million mortgages will be voluntarily modified under the Obama plan and that up to 1.25 million will be modified in bankruptcy court.

If the reform does not pass, Moody’s Economy.com says its estimate of the number of modifications would drop by more than half, with 475,000 fewer voluntary modifications and zero court-approved modifications.

The House passed reform legislation more than a month ago. Senate Democratic leaders say that nearly all 58 members of their caucus are on board. Republican leaders say all 41 of their senators will block a vote. If they hold ranks, it would mean that senators from states hardest hit by foreclosures would help to ensure the bill’s failure — including John McCain and Jon Kyl of Arizona and John Ensign of Nevada.

Republican opposition appears to have more to do with fund-raising than principle. The American Bankers Association and other lobbies remain opposed to the fix. Sam Geduldig, a lobbyist for several banking trade associations, recently told The Times’s Stephen Labaton and Eric Dash that as a minority party, Republicans will get “professional donors and lobbyists to look at them in a different light,” if they show they can affect policy.

There might be some good news. Several powerhouse banks, including JPMorgan Chase, Bank of America and Wells Fargo, have been talking with Democratic leaders in recent days about crafting a bankruptcy fix. Democrats hope the big banks can rope in a few Republicans. The danger is the bill could be watered down.

The Obama administration, which is propping up the banks, should put more pressure on them to support a robust bankruptcy reform.

If that doesn’t work, there’s always the appeal to reason.

Republican senators need to understand that a vote against this reform is a vote against economic recovery. As foreclosures add to the glut of unsold homes, house prices will continue to fall. That will lead to more foreclosures — declining equity is a risk factor for default — and more defaults and foreclosures will hamper the banks’ recovery and further constrain credit. And so on.

The White House needs to argue the case for bankruptcy reform forcefully on Capitol Hill — and to voters.

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Housing Bubble Smackdown: Bigger Crash Ahead

April 23, 2009 · No Comments

1 day ago ago by Mortgage Auditor. Spam? Tags: loan audit, Foreclosure Prevention, Figting Foreclosure, housing, LOAN MODIFICATION, fighting foreclosure, forensic loan audit, foreclosure defense, mortgage audit, foreclosure defense, LOAN MODIFICATION

Due to the lifting of the foreclosure moratorium at the end of March, the downward slide in housing is gaining speed. The moratorium was initiated in January to give Obama’s anti-foreclosure program—which is a combination of mortgage modifications and refinancing—a chance to succeed. The goal of the plan was to keep up to 9 million struggling homeowners in their homes, but it’s clear now that the program will fall well-short of its objective.

In March, housing prices accelerated on the downside indicating bigger adjustments dead-ahead. Trend-lines are steeper now than ever before–nearly perpendicular. Housing prices are not falling, they’re crashing and crashing hard. Now that the foreclosure moratorium has ended, Notices of Default (NOD) have spiked to an all-time high. These Notices will turn into foreclosures in 4 to 5 months time creating another cascade of foreclosures. Market analysts predict there will be 5 MILLION MORE FORECLOSURES BETWEEN NOW AND 2011. It’s a disaster bigger than Katrina. Soaring unemployment and rising foreclosures ensure that hundreds of banks and financial institutions will be forced into bankruptcy. 40 percent of delinquent homeowners have already vacated their homes. There’s nothing Obama can do to make them stay. Worse still, only 30 percent of foreclosures have been relisted for sale suggesting more hanky-panky at the banks. Where have the houses gone? Have they simply vanished?

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BEWARE OF LOAN MODIFICATION SCAMS

2009-04-07T10:01:00.000-07:00

Both the State and Federal governments have issued warnings to consumers of scams involving mortgage modifications. Government agencies are warning of these scams, accusing "criminal actors" of preying on desperate borrowers caught up in the nation's housing crisis.
Government officials said that scammers are seeking to take advantage of borrowers in danger of default by charging them upfront fees of $1,000.00 to $3,000.00 for help with loan modifications that rarely, if ever, pay off.
The frauds often involve companies with official-sounding names designed to make borrowers think they are using the Obama administration's efforts to help modify or refinance 7 million to 9 million mortgages.
"If you are struggling to make your mortgage payment, or if you are facing foreclosure, stay away from anyone who says they will save your home for money upfront," Illinois Attorney General Lisa Madigan told reporters.
Officials say such operations almost always are fraudulent, and that help is available for free from government-approved housing counselors.

If you have questions or concerns about someone who is offering you help for money upfront, call us, Smith & Weer. We'll be happy to sit down with you, and discuss what options are best for you.

Can I Buy A New Car If I File Bankruptcy?

2009-03-27T06:32:00.000-07:00

You can buy a new car even though you are filing Bankruptcy (assuming, of course, that you can make the car payments).

First of all, if you are going to file a Chapter 7 Bankruptcy, and know that you will need a new car in the immediate future, it’s perfectly legal to buy one before you file. You have to make the payments on the vehicle, and you shouldn’t use credit cards or borrow money to buy it, but if you have the necessary down payment and the wherewithal to keep up on the monthly expense, than there is nothing wrong with the purchase. The car will become property of the bankruptcy estate so if there will be equity in it, check with your attorney to make sure that it will be exempt.

If you’re in a Chapter 13 bankruptcy and need a new car, you will have to get the approval of the court to incur new debt. For ordinary expenses like a vehicle, this is a fairly routine matter: it happens to the majority of debtors in a Chapter 13.

If you’ve already filed a Chapter 7 bankruptcy, and have exempt cash to buy a vehicle, you can do so immediately. You don’t need the court’s or the trustee’s permission or even to wait until the case is discharged.

So, don’t listen to anyone that tells you that it will be impossible to buy a car if you file bankruptcy. Just be sure to check with a competent bankruptcy attorney as to the specifics in your state.

Are There Ways To Cancel My Student Loan?

2009-03-19T09:08:00.000-07:00

There are ways to cancel student loans. Sometimes, people attend schools that close, issue false certificates, or schools that fail to pay refunds to students, who for whatever reason, cancel their classes. If you are someone who took out a student loan to pay for classes under the foregoing circumstances, you may be able to cancel your student loan indebtedness, altogether. There are also ways students may cancel student loans because of death or disability. Profession-related cancellations may be available through the new public service forgiveness program. Student loans may, in limited circumstances, be discharged in bankruptcy if a debtor can prove undue hardship. Finally, if none of the foregoing are options, a student may be able to negotiate an income-based repayment plan with his or her lender in order to reduce their monthly payments.

If you have questions concerning this post, feel free to call Smith & Weer, and feel free to post a comment.

Stop the Sale, Save Your House

2009-03-16T15:59:00.000-07:00

Chapter 13 Bankruptcy may be just the ticket for homeowners who are having a tough time juggling large unsecured consumer debts and their monthly mortgage payments. Chapter 13 can help people save their houses when the mortgage companies don’t want to deal. Filing bankruptcy will put a stop to all foreclosure proceedings, including the sale, even if its filed just one day beforehand. Chapter 13 provides an option to take control instead of being strung along by a lender’s loss mitigation department.

Beware of Mortgage Loan Modification Scams

2009-03-10T07:10:00.000-07:00

With a lot of news circulating about the government's attempts to help homeowners facing foreclosure, a new cottage industry has sprouted up offering assistance. Those facing foreclosure receive an avalanche of mail offering assistance to help them. Some of these offers of assistance state that they are, in some way, authorized to help with modifying the mortgage loan. The offers of help may come from companies that reside out-of-state. These companies will normally speak with you over the phone in hopes of gaining your confidence. Soon, they will ask that you send them money to assist you through this difficult time. Don't do it. Why? Because it is likely that these companies are not able to help you, they only want your money. Instead of contacting these purported companies, be aware that there are genuine, HUD approved counselors who will help you with your loan. And, these HUD approved counselors will not charge for their assistance. You may contact them by using a toll free number. The HUD approved counselors are federally regulated. In short, when people face foreclosure, they are looking to someone to help them, and they possibly may fall into a trap that only makes matters worse.

Can I keep my car if I file bankruuptcy?

2009-03-09T08:27:00.001-07:00

There are two primary types of bankruptcy that apply to consumers. Those are Chapter 7 and Chapter 13. Chapter 7 is commonly referred to as a straight liquidation bankruptcy. Chapter 13 is commonly referred to as a repayment plan. In both Chapter 7 and Chapter 13, a debtor is allowed to keep his or her car. In Chapter 7, all a debtor needs to do is to reaffirm her debt with the car lender. Reaffirmation simply means that the debtor agrees to honor the car loan contract that was in effect before she filed. Then, both during and following the bankruptcy, the debtor must make her regular monthly payments. In a Chapter 13, again the debtor simply indicates to the court that she intends to keep her car. Again, the debtor must remain current on her monthly payments during the administration of her case. The one major exception between the two types of chapters, is that in a 13, a debtor, if she is behind on car payments, may make those up in the plan, and continue to use the car, if after filing, she remains current on her payments.

2009-02-20T11:04:00.000-08:00

Is the bank ready to foreclose on your home or business?

Have you lost your job and can't pay the bills?

Has an unexpected illness left you struggling to pay for medical costs?

Are creditors calling night and day?

Do any of these sound familiar? If so, let Smith & Weer, P.C., Attorneys at Law, help you work through the problem. Our legal team is ready to evaluate your situation and make specific recommendations based on your current financial status. We will work with you to restructure your debt and find financial solutions.

Smith & Weer has helped hundreds of people in Central Illinois restructure their financial obligations through sound legal and financial advice. Helping good people with bad problems, that's what we do. Don't wait any longer. Your debt obligation is not getting any smaller. Call us today to arrange a personal, face-to-face consultation — at no charge and no obligation to you.

(309) 694-6700
2000 W. Pioneer Parkway
Suite 10A
Peoria, Illinois 61615

(309) 347-4300
410 Elizabeth Street
Pekin, Illinois 61554

Debt Help Forum

Will Bankruptcy Stop Foreclosure Of My Mortgage Loan?

Is My Bank Required To Modify My Mortgage Loan?

July 8, 2009 · Leave a Comment

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Will I Be Taxed On The Balance Forgiven If My Home Is Foreclosed?

April 24, 2009 · No Comments

The Loan Modification Bill is Scheduled to be Debated Next Week

April 24, 2009 · No Comments

Housing Bubble Smackdown: Bigger Crash Ahead

April 23, 2009 · No Comments

BEWARE OF LOAN MODIFICATION SCAMS

Can I Buy A New Car If I File Bankruptcy?

Are There Ways To Cancel My Student Loan?

Stop the Sale, Save Your House

Beware of Mortgage Loan Modification Scams

Can I keep my car if I file bankruuptcy?