Published Thursday, September 2, 2010 @ 10:36 am

Imagine for a moment that you’ve fallen on hard times. You’ve gotten one, two, or maybe more payments than you can count behind on your mortgage. Your bank or mortgage lender has contacted you over and over, threatening you with talk of a foreclosure. You’ve even been told to expect a foreclosure sale in the coming month. The odd thing is, nothing has happened.

You’re left scratching your head, with no clue what’s actually going to happen, without hearing a peep recently from the same lenders who’s been threatening to take your home for months.

According to real estate industry analyst Sean O’Toole, in this situation you may have had a lucky turn on what he calls the “Foreclosure Roulette.” What does this mean?

According to Arthur Delaney of The Huffington Post, “Banks don’t want to recognize losses by having to put homes on the market at foreclosure-sale prices, but they don’t want to encourage borrowers to quit making payments either, so, O’Toole believes, they randomly foreclose on some people to prevent widespread ‘moral hazard.’ The rest are left hanging with the help of the government’s “extend and pretend” approach to the collapse of the housing bubble.”

This type of property ‘purgatory’ is affecting many Americans, including those who have tried to work with banks to modify mortgages under the Obama administration’s Home Affordable Modification Program—a program meant to place eligible borrowers into a three-month trial period before making the modification “permanent” for five years. For some homeowners, this ‘trial period’ drags on much longer than the three-month window, only to followed by a unexplained rejection letter from banks and a great deal of anxiety as they wait for the bank’s next fateful move.

As Delaney reports, the anxiety may last a while.  “The average foreclosure now takes 469 days, according to Lender Processing Services, whereas it took 319 days at the beginning of 2009. Many industry analysts say that is due to the Troubled Asset Relief Program, HAMP, and federal accounting-rule changes. ‘We weakened accounting standards to allow banks to keep non-paying mortgages in their books at full value,” wrote economist Dean Baker, co-director of the progressive Center for Economic and Policy Research. ‘Banks also know that they are looking at glutted markets right now, so they have little incentive to take possession of a home and then try to sell it. And, the HAMP and other programs mostly delay foreclosures and hand money to banks, instead of keeping people in their homes.’”

An additional offshoot of this treacherous tactic of delaying foreclosures is the additional expectation that home prices will drop and bank’s refusal to enact a “foreclose and sell” strategy may stall the market and add to the number of strategic defaults.  These unseemly practices are causing many lawmakers to call for bankruptcy judges “to write down mortgage principal (a process sometimes known as ‘cramdown’).”

Until things turn around, don’t sit and wait for your own personal housing bubble to burst. Join the millions of American homeowners who have found immediate help to keep (or flee) their hard-hit homes. If you have been harmed financially by the lingering housing crisis, knowing a qualified bankruptcy attorney can help you to conquer your creditors and face your economic fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.” The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Monday, August 30, 2010 @ 2:20 pm

In previous posts we’ve mentioned the findings of Third World America, Arianna Huffington’s new book taking an up-close-and-person and personal look at those hardest hit by the ongoing economic crisis: individuals, families and even whole communities.

In the process of capturing this unwelcome slice of American life, Huffington’s own news and information website The Huffington Post has “mapped the areas hardest hit by home foreclosure, unemployment and bankruptcy this year.”

To give you an idea of the depth and scope of the damage done by the financial meltdown, here’s an overview of how hard people are being in hit throughout a state like North Carolina.

Rocky Mount, NC
Named one of the “America’s Ten Most Impoverished Cities” by Forbes Magazine, Rocky Mount, NC, is a city where its citizens face unbelievably low median incomes, a crumbling infrastructure that means many pay more in utilities than their mortgages, and, according to HuffPost’s map, staggering 13% unemployment. Most surprisingly, these dramatic jobless figures existed even before the recent recession.

Cornelius, NC
In addition to recording the stats of a struggling nation, HuffPost is also accepting its stories. One of these telling tales hails from Cornelius, NC, where Army vet, Kent Walker shared, “I’m a 20 year Service Disabled Veteran with 2 lifetime benefits: (VA Disability and Army Combat Related Special Compensation (CRSC). After a[n] Army helicopter crash I was medically retired in 2004 and bought a house in Charlotte NC (Bank Of America headquarters) to complete that American Dream with my wife and 2 girls. Four years later, thanks to Wall Street, my Commercial Real Estate business was busted and I was in foreclosure. I paid into the HAMP program and was dragged along for almost 12 months before being denied last month. My two girls (age 4 and 8) and I sit here waiting for the Sheriff to show up with the “Notice of Eviction” while my wife is away deployed in the Army.” Unfortunately, the denial of this type of American Dream is common—even in places like Cornelius in Mecklenburg County, one of the wealthiest in a struggling state.

Youngsville, NC
In places like the tiny Triangle town of Youngsville, NC, citizens are facing their own unemployment and mortgage meltdowns. One anonymous victim of this uncertain economic era told HuffPost, “It feels as though the bank is doing whatever it can to move a foreclosure along. There is no working with us…homeowners who have been promptly paying the mortgage for 10 years.”

Do these stories sound familiar to you, your family and your friends? Have you been impacted by the financial crisis? In what ways are you bouncing back? What are you doing in your neck of the woods to keep from losing your shirt in “Third World America?” Click here to add your facts, figures and recent fortunes (or not) to The Huffington Post map.

Once you’ve shared your story—like so many others in North Carolina—it’s time to turn to someone who’s got your back when you’re in the process of bouncing back. That “someone” is inevitably a qualified bankruptcy attorney who can help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.” The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Friday, August 27, 2010 @ 9:47 am

In the hard-hit housing market, there’s some good news and some bad news. First the good news: according to the Mortgage Bankers Association, for the first time since 2006, the number of loans in the process of foreclosure fell in the second quarter. But then there’s the bad news: even with these drops in default leading to foreclosure, still more early delinquencies are apparent all across the county as homeowners continue to struggle with high unemployment and job insecurity.

According to The New York Times, “The problem is no longer high-interest subprime loans, many of which have worked their way out of the system. The critical area now is prime loans, where defaults are driven by stubbornly high unemployment.” So while their home loan costs come as no surprise, without a steady paycheck, many Americans are falling behind on even the most predictable of expenses: their mortgage.

The new information about the detriments of early delinquencies is paired with a forecast that homeowners will have a tougher time selling the very homes that are draining their coffers. As the NYT reports, “Sales of existing homes in July fell by 26 percent from the same month last year. Sales of newly built homes dropped during the month by 32 percent from 2009. It was the slowest July for new homes in records stretching back to 1963.”

This bleak housing market means that millions could still lose their homes, with the associated impacts on consumers’ ability to spend, get loans from banks already beleaguered by another wave of defaults and be a part of a further kink in the chain of buying and selling large real estate assets that could have provide a much-needed shot in the arm to the wounded American economy.

Plus, the perils buying a home and falling into foreclosure only add to the inventory of homes at a time when there are already too many on the market. This situation spells a push down of already bargain basement housing prices that may force underwater borrowers to simply give up. As the NYT put it, “The reason people walk away from their loans in so-called strategic defaults is because they owe so much more than their home is worth. The more the market goes down, the more people are placed in this unhappy position.”

Fortunately, these “unhappy positions,” are precisely the scenarios for which bankruptcy was created. If you’re having trouble making your mortgage, living in a home that is hopelessly underwater, and/or residing in an area that is currently devalued and an eyesore for the foreseeable future, bankruptcy can help get you back on the right side of the proverbial tracks: allowing you to surrender your underwater home, negate your personal and financial liability, and move forward financially.

Don’t wait for your own personal housing bubble to burst. Join the millions of American homeowners who have found immediate help to keep (or flee) their hard-hit homes. If you have been hit hard by the lingering housing crisis, knowing a qualified bankruptcy attorney can help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.” The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Friday, August 27, 2010 @ 8:21 am

In the annals of bankruptcy law, special rules have come to dictate how certain property—from homes to cars to household items—is categorized and dispensed post-filing. Specifically, most states have some sort of homestead exemption that protects some or all of the equity in the debtor’s home from the clutches of creditor claims.  The Bankruptcy Code provides debtors with a homestead exemption—an exemption that is doubled for joint owners.

But issues can arise in a bankruptcy’s homestead protections when a non-resident co-owns the home, such as when a parent co-signs with an adult child to help subsidize the child’s first home.

In this situation, where parents purchase a house for a child (not uncommon in these tough financial times) and are also on the deed as co-owners of their child’s home, and the child or even the child and parents then later face credit problems and are considering bankruptcy, questions can arise as to whether a Chapter 7 filing by one party would affect the other’s interest in the home.

In one particular case, the jointly-owned house qualifies for unlimited homestead protection under current bankruptcy rules. For example, if the child files for Chapter 7 bankruptcy placing his partial interest at issue, in most cases the bankruptcy trustee has no interest or rights relating to the parents’ interest in the home. In addition, the child’s ownership interest in the home, as his or her primary residence, is also protected under bankruptcy’s homestead exemption.

In the other scenario, wherein the non-resident, co-home owning parents are the insolvent party who file for bankruptcy, their bankruptcy trustee may have a claim against the their interest in a child’s home because the parents do not live in the home and are therefore not protected under the homestead exemption.  While the bankruptcy trustee could not force the sale of the homestead while the child is using the home as his or her primary residence, the trustee could instead place a lien on the parents’ interest in the home, payable upon the sale or refinancing of the home.

Depending on whether the child pays all of the taxes on the home, all of the mortgage payments, takes care of all other home expenses and exclusively uses the property, the parents can attempt to keep the trustee’s hands off of the home altogether by arguing they have no equitable interest in the house subject to the bankruptcy estate; in short, all beneficial interest in the house has been transferred from parents to child. To further substantiate this “hands-off-the-home” argument, the parents can provide written evidence in the form of a gift tax return or other written documents supporting their intent to “gift” the homestead to the child.

Regardless of whether the parent or child is the bankruptcy bound party, the above scenarios provide further examples of why parties should tread cautiously when considering joint-ownership of assets.

Because of the intricacies of joint ownership, the homestead exemption and/or bankruptcy law, getting to know a qualified bankruptcy attorney is your first best step down the right path to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Thursday, August 26, 2010 @ 11:46 am

During the mid-2000s, housing prices reached stratospheric levels with mortgage lenders more than willing to be liberal with their loans, selling the idea of the “home as American Dream” to anyone who would listen—whether they were qualified or not.  But, if the recent housing crisis has taught us anything, it’s that home ownership isn’t always what it’s cracked up to be.

So, after the recent mortgage meltdown, many are wondering: “where do we go from here?”

That’s the very question asked in a recent report by NPR. In it, correspondents found that after two decades of expansions in home ownership—fostered by government mortgage guarantees by the now much-maligned likes of Fannie Mae and Freddie Mac—many policymakers are looking at housing finance reform as a top priority to the nation’s prospects for economic recovery.

“The two mortgage finance giants made astonishing mistakes,’ Raj Date, executive director of a financial policy think-tank called the Cambridge Winter Center, told NPR’s Audie Cornish. Ultimately, Date said it might be time to rethink homeownership as an American ideal. ‘The world we live in today is not quite the world that existed in 1950,” he noted. “The nature of households and the rate at which they dissolve and reform, the nature of work and its transient nature across geographies are all things that suggest that maybe, just possibly, a middle-class American shouldn’t stake themselves to an illiquid, very large, concentrated, leveraged asset —- that is to say, a house.’”

As a result, many are revisiting (and reconsidering) the idea of the “white picket fence,” and turning to rental property as a way to prevent real estate from owning them—at least financially—instead of the other way around.

“Homeownership has gone from being pretty much an unmitigated good — something that would provide stability—and instead has thrown a huge cloud of doubt over the value of homeownership for a lot of people,” Alyssa Katz, author of Our Lot: How Real Estate Came To Own Us told NPR.

Unfortunately, for many Americans, alternatives to home ownership, namely renting property, means relinquishing that long-held sense of success and status that seems almost a birthright for many in this country. And beyond national sentiment, renting can be a precarious living scenario, reliant on landlords and leaseholderss for repairs, renewals and reliability that, in this uncertain economic era, is often a luxury. Between the social and socio-economic stigma and the relative lack of security, even in these tough financial times, renting can be many families’ last resort.

As a result, it’s important for homeowners with dwindling equity, underwater mortgages, or facing foreclosure to consider other options in attempting to save their shelter. Of these options, Chapter 13 bankruptcy can provide a tried and true alternative to moving onward and, in some cases, downward.

Don’t wait for your own housing bubble to burst or become a reluctant renter. Join the millions of American homeowners who have found immediate help to keep their hard-hit homes. If you have been hit  by the hovering mortgage crisis, knowing a qualified bankruptcy attorney can help you conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Thursday, August 26, 2010 @ 9:27 am

Debtors attempting to avoid bankruptcy by waiting for housing prices (and equity) to increase may be waiting a long time. In fact, according to The New York Times, wealth-building via housing booms may have also gone the way of guaranteed pensions, free healthcare, and secure employment.

Per the NYT, “many real estate experts now believe that home ownership will never again yield rewards like those enjoyed in the second half of the 20th century, when houses not only provided shelter but also a plump nest egg. The wealth generated by housing in those decades, particularly on the coasts, did more than assure the owners a comfortable retirement. It powered the economy, paying for the education of children and grandchildren, keeping the cruise ships and golf courses full and the restaurants humming. More than likely, that era is gone for good.”

This rather bearish news on the state (and future) of the housing market is capped by the finding from Dean Baker, co-director of the Center for Economic and Policy Research, who “estimates that it will take 20 years to recoup the $6 trillion of housing wealth that has been lost since 2005. After adjusting for inflation, values will never catch up.”

Unfortunately, many Americans aren’t buying this news on the housing bomb. “In an annual survey conducted by the economists Robert J. Shiller and Karl E. Case, hundreds of new owners in four communities — Alameda County near San Francisco, Boston, Orange County south of Los Angeles, and Milwaukee — once again said they believed prices would rise about 10 percent a year for the next decade.”

In truth, the housing-as-investment ideal that arose post World War II hasn’t been on solid ground for decades–when inflation of the 1970s and favorable tax policies increased housing prices followed by a long decline in mortgage rates in the early 1980s. In the next decade, rates rose, allowing American homeowners to withdraw about $100 billion in home equity houses. These billions paid for a lot of luxury—luxuries that we’re now paying for, in spades,  since the inflated home prices burst the housing bubble in the 2000s.

“The experience we had from the late 1970s to the late 1990s was an aberration,” said Barry Ritholtz of the equity research firm Fusion IQ. “People shouldn’t be holding their breath waiting for it to happen again.”

With substantial sums of money available from home equity in the 1990s now a distant memory, many homeowners in the new foreclosure-plagued, underwater American reality are fortunate to still be solvent. For others, the tumble in housing prices has taken it’s toll, leaving many wondering where to turn no that their own personal “home sweet homes” are leaving a sour taste in their moths.

Don’t wait for your own personal housing bubble to burst. Join the millions of American homeowners who have found immediate help to keep their hard-hit homes. If you have been hit hard by the lingering housing crisis, knowing a qualified bankruptcy attorney can help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Wednesday, August 18, 2010 @ 7:44 am

With many experts predicting a protracted economic malaise with imperceptible growth and stubbornly high joblessness, bankruptcy filings appear to be in true recession-era form, rising in recent months, and, according to many analysts, increasing with no end in sight. In fact, during early summer, the American Bankruptcy Institute (ABI) validated these fears, reporting that personal bankruptcy filings increased in 2010 compared with only one year ago.

As bankruptcy figures continue to rise, many critics are charging insolvent Americans—seeking shelter from personal bankruptcy—as being responsible for raising interest rates, cutting consumer confidence and retail sales, and outfoxing creditors while other, less indebted Americans are required to pick up the slack…and the tab.  In reality, though, Americans who have filed for bankruptcy are in many ways saving all of us money.  And you could too, while also saving yourself years of bills, harassment and stress.

Don’t believe it? Are you considering bankruptcy, but feeling guilty about adding to broader socioeconomic burdens? Well fear not. The truth is that avoiding bankruptcy costs more, and here’s why:

Bankruptcy Avoids Expensive Creditor Litigation
Creditors can be an ever-present, and unwelcome, part of the lives of many debtors. And when consumers attempt to go it alone and avoid bankruptcy, they often find themselves embroiled in creditor lawsuits—battling banks and other businesses for returns on debts they cannot afford to pay in the first place.  Because creditor litigation can be more expensive than the debts in question, often ending without a resolution and with the debtor still unable to pony up, these lawsuits act to siphon money from creditor accounts, wasting not only their money, but also draining resources from the business’s community: including its ability to keep people employed, and support the community of people on which it depends. By contrast, a debtor who files for bankruptcy not only avoids litigation and further creditor harassment, returning what they can to the creditor for a clean financial slate, but it preserves those business resources that can keep a broader community afloat in these tough financial times.

Bankruptcy Can Stop the Foreclosure Crisiss
With the economy in the gutter, underwater mortgages an everyday occurrence, and home equity not what it used to be, barring a bankruptcy filing, Americans are losing their houses to foreclosure in unprecedented numbers. But debtors who avoid bankruptcy and lose their biggest asset aren’t the only ones suffering from a loss: communities with high foreclosure rates lose their financial value, aesthetic value and are less safe than communities with homes that are filled to the brim with families. This ripple effect to the larger community could be solved with a bankruptcy filing—all from the safety and comfort of your own “home sweet home.”

Bankruptcy Can Mean Increased Productivity
If you’re reading this blog you are likely considering bankruptcy. And if you’re considering bankruptcy, you know the tremendous emotional and physical toll that being buried in debt can have on a person’s life. Overwhelming stress, doubt and even fear can result from having too much debt to handle and feeling there’s no way out. And this stress cannot only impact you, your family and your friends, but also your work, your co-workers and your ability to get the job done. In turn, bankruptcy can reduce stress and financial distraction, allowing a person to be more productive—at their job and in their community—for months and years to come.

If you are drowning in debt and creditors are harassing you, underwater in your mortgage and facing foreclosure, or succumbing to the stresses of your poor financial portfolio, bankruptcy can be the key to better financial future for you, and the people around you.

If you meet any of the above criteria, it’s never been more important to act now, seeking competent and experienced bankruptcy counsel from the very start. An experienced bankruptcy attorney knows the ins and outs of the bankruptcy process and can assist throughout your case.

The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Thursday, August 12, 2010 @ 10:22 am

If you’re reading this, odds are you may be suffering through  a tough financial time. Yet, what might make you feel a bit better about your current ordeal is the knowledge that you’re not alone. Millions of average Americans just like you are facing a shared financial circumstance as they struggle to stay afloat in the wake of this decade’s Great Recession—facing foreclosure, job insecurity, and, in some cases, insolvency.

In the series, Our Great Recession 2.0, we’ll delve into some of the more unique stories of this decade’s unprecedented economic downturn, allowing you to see familiar faces and dire places people are going in order to handle our collective financial meltdown head-on.

In part four of this ongoing series, we meet the LaRochelles, an average American couple bearing witness to what some are calling an end to the middle class.

A couple of years back, David and Debbie LaRochelle owned a couple of houses: one home in Southern Florida and a mobile home in Georgia, near Debbie’s parents. They both worked full-time with a combined income of $100,000 a year. Things were great. And they were living the middle class dream.

According to The Huffington Post, today times have certainly changed for the LaRochelles. “Two years and a recession later, the 60-year-old couple are both unemployed, have drained their savings and 401Ks, are depending on Social Security, unemployment benefits and COBRA health insurance to stay afloat and are in the process of losing their Florida house in a devastating short sale. Their dilemma is an increasingly common one: they can no longer afford to make their mortgage payments without an income, but they can’t sell their house because they now owe more on it than it’s worth….The LaRochelles are two of the nearly 2.4 million Americans who are seriously delinquent on their mortgage payments, thanks to plummeting property values and lingering unemployment. And according to the Center for Responsible Lending, a nonprofit research and policy group, as many as 9 million homeowners could go into foreclosure in the next two years.”

It turns out the LaRochelles didn’t know their property had dropped in value from 139K to 49K. “It’s been such a nightmare,” David LaRochelle told HuffPost. “I tried to work something out with Wells Fargo, but they wouldn’t even talk to me until I was 30 days past due. We tried a deed in lieu three times because they ‘lost the paperwork’ twice, and then they turned it down because they said we hadn’t advertised our property at fair market value.”

This very type of lender indifference, mortgage delinquency and underwater living is a situation tailor-made for bankruptcy.  If you’re like the LaRochelles: having trouble making your mortgage, living in a home that will never accrue equity, and/or residing in an area that is currently devalued and an eyesore for the foreseeable future, bankruptcy can help get you back on the right side of the tracks.  A Chapter 7 bankruptcy will allow you to surrender your underwater home, negate your personal and financial liability, and move forward financially. Or, if you so choose, keep your home while using Chapter 13 to catch up your delinquency and pay your mortgage through a Chapter 13 plan.

Because it’s all about using all of the tools at your disposal during our own Great Recession.

Bankruptcy could have worked for the LaRochelles. It could work for you too. If you’ve been affected by the economy and are wondering how to get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Thursday, August 12, 2010 @ 10:18 am

If you’re reading this, odds are you’re considering bankruptcy. As such, you have a lot on your plate. Yet, what might make you feel a bit better about being bankruptcy bound is the knowledge that you’re not alone. Millions of average Americans just like you are facing desperate circumstances as they struggle to stay afloat in the wake of this decade’s Great Recession—facing foreclosure, job insecurity, and, of course, insolvency.  In the series, Our Great Recession 2.0, we’ll delve into some of the more unique stories of this decade’s unprecedented economic downturn, allowing you to see familiar faces and dire places people are going in order to handle the financial meltdown head-on.

In part three of this ongoing series, we meet Paul Nawrocki, best known as the “sandwich board job hunter.”

In 2008, amid a crumbling economy, Nawrocki took to Manhattan streets wearing a sign emblazoned with “almost homeless.” Shortly thereafter his mustached face could be seen on news channels like CNN and shadowed by photojournalists, followed by more than 100 television interviews.  Unwittingly, the laid-off toy company executive unwittingly became the face of out country’s economic troubles and a symbol for how even the mighty and well-connected could fall.

And fall he did. As The Huffington Post’s  Samantha Gross reported, “even though the attention faded, his troubles did not. Having the eyes of the world on him didn’t land the then-59-year-old any viable job interviews. His wife was sick, and keeping his health care was a struggle. He began to decide between the doctors and the mortgage.”

Fortunately, the man who was once the face of the economic downturn may once again wield a “sign” that happier days are here again. That’s because last month, after collecting almost two year’s worth of unemployment, Nawrocki found a job. As The HuffPost reported, “He’s not the only one. While unemployment remains high, the nation added 162,000 jobs last month – the first significant job growth since the downturn began. ‘It was good. It felt good,” the Beacon, N.Y., resident told Gross of his first day back at an office – 25 months after he was asked to leave his old one. ‘It felt like all new again because it had been so long.’”

The bad news remains: two years of unemployment still dealt a tremendous blow to Nawrocki’s financial portfolio. He remains behind on his mortgages, and, after months of food stamps, food banks and relying on handouts from family, he and his wife were forced to declare bankruptcy.

Despite the ups and downs of Nawrocki’s experiences, his weeks of joblessness provide many lessons for many of the would-be employed. The former executive didn’t get his new job from his stint in the limelight, but rather “through old-fashioned networking. He went to a toy-industry fair, and a friend introduced him to the man who would become his boss. Nawrocki believes the tales of his sandwich-board days helped him land an interview. His paycheck is nearly half the size; he had made almost $100,000 a year. And his title is a little less grand. But the job still seems a wondrous, unlikely rescue – as though a hand had descended from the sky at the last possible moment. ‘I had reached the limit, the last week,’ he recounted. “And they called and had me start the next week. … Through this whole experience it’s been like that. We get right to the edge, and then …’”

And then…for the long-time unemployed like Nawrocki, it’s all about re-finding our greatness during our own Great Recession.

Bankruptcy helped Paul Nawrocki. It can help you too. If you’ve been affected by the economy and are wondering how to get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Tuesday, August 10, 2010 @ 9:26 am

You can’t turn on a television or read a newspaper today without hearing about the housing crisis, with foreclosure remaining the focus of many a homeowner’s worst nightmare. Yet even in areas where banks aren’t repossessing Americans’ biggest assets, the real estate market meltdown is still having its way with local politics and policymaking, haunting many communities—in the form of skyrocketing property taxes—for years to come.

As PBS Newshour’s Dante Chinni found, many long-term residents in some of America’s more attractive areas are facing unprecedented property taxes as newcomers move in and make themselves at home in houses (and communities) that have ballooned in value—even amid the mortgage meltdown.

As Chinni reports, “Fueled by many out-of-staters looking for a second home with views of the glacier-carved Mission Mountains and only miles from Glacier National Park, property reappraisals including land and home soared to as much as $10,000 per foot of shoreline along the lake. Those increased values helped push Flathead County, which abuts the lake into the Monied ‘Burb county classification in Patchwork Nation. And like other communities that experienced rapid growth in real estate assessments those ballooning values came with other costs. On Flathead Lake, the complicating factor has been rising property tax bills. For the new residents who had dropped $1 million for a home, the bill was no shock, but for the residents who had owned their home for 20 years, the new levy threatened to tax them out of their homes.”

Still, the potential for being taxed out of house and home has become routine for many in areas that have witnessed meteoric increases in property assessments over the past several years (such as the Northwestern Montana example above). In some areas, these levies have hit so hard in some towns, “that some neighborhoods have seen special assessments that cut values across the board designed to make home values more realistic and more current.”

In the state of Montana, the average household income is a bit under $44,000. In some counties it’s a bit more, and some a bit less, but in places like Lake County, affected by the reappraisals and rising levies, the average family brings home $38,505. But, as Chinni says, “with property appraisals soaring along some parts of the lake, the average family can only afford so much in terms of land and taxes. But any reappraisals will shrink an already anemic tax base and that could mean trouble for communities trying to keep their services running and financial house in order.”

Until the housing market levels the playing field for many American homeowners, it’ll be a hard many to avoid rising mortgage rates, foreclosure fights, and now, the possible escalation of property taxes—especially during taxing times.

Chapter 13 bankruptcy can provide for the payment of past-due real property taxes and can help you catch up on your house payments, among many other things.

Don’t wait for your own housing bubble to burst. Join the millions of American homeowners who have found immediate help to keep their hard-hit homes. If you have been affected by the mortgage crisis, knowing a qualified bankruptcy attorney can help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Wednesday, August 4, 2010 @ 7:11 pm

In the Triangle, an area known for entering recessions later and exiting them earlier, foreclosures continue to be a problem, as the rate dipped a tad in June but on the whole, remains above where it was last year at this time. For a market like ours, that’s not a good sign.

Foreclosure and bankruptcy are often wound tightly together. In most cases, if a person can’t pay their mortgage, a number of other bills are remaining unpaid as well. A lot of times it comes down to hard economic decisions. If it came down to a medical bill for a child or a mortgage payment, it’s a safe assumption that the mortgage is going to be late this month.

Surprisingly, and most likely out of fear of the unknown, very few people actually call their bank when they realize that the mortgage is becoming a burden too difficult to bear. More often, the first step is to pay late or not at all and then wait for a notice to arrive to begin the discussion about what comes next. Sometimes, your bank could help you before needing you to enroll you in a mortgage modification program, at which point you become just another number to the bank on a call queue and another statistic to the evening news. Being proactive, just like in bankruptcy, can help you tremendously when it comes to getting your mortgage under control.

The News & Observer reported that foreclosure filings in the counties of Durham, Johnston and Wake totaled 4,433 for the first half of 2010, a 24 percent jump from the same point in 2009. That’s a healthy spike, to be sure. Even with Wake County reporting only 443 foreclosures (a 20 percent decrease from last year’s June count) the county as a whole is higher than it was for the January to June period of 2009. Durham County’s foreclosure rate is higher by 10 percent for June and experienced a 35 percent increase for the first six months of 2010 in comparison with the first half of 2009.

The N&O notes that a foreclosure filing is only the start of the foreclosure process and that not every filing equals an official foreclosure. However, it still means that somewhere, a family is having a very hard time making ends meet, which is not a good sign for an economy believed to be in recovery. And it’s even worse for a regional economy that on a national basis is believed to be healthier than most.

In many real estate markets across the country, foreclosures are what lead the housing sales market. More agents are fielding calls from parties, either families or investors, looking to get in on the bottom of the housing cycle. Buying a foreclosure is not a real simple process often requiring a good deal of cash. Thus, it’s a niche market. In the end, real recovery in the housing market is going to take mainstream, mass-market buyers. That is, families with jobs. And today, there are just too few of them.

If you’re facing foreclosure, call a Bankruptcy attorney today. A Chapter 13 can help you stay in your home and possibly lower your monthly payment. Call 1-800-899-1414 today for a free consultation.

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Published Friday, July 30, 2010 @ 2:58 pm

More bad news for those facing tough financial times: mortgage foreclosures are likely to top the one million mark in 2010. As The Associated Press reported in the last week, “Nearly 528,000 homes were taken over by lenders in the first six months of the year, a rate that is on track to eclipse the more than 900,000 homes repossessed in 2009, according to data released Thursday by RealtyTrac Inc., a foreclosure listing service.”

By comparison, according to RealtyTrac, in an average year the United States only sees about 100,000 homes in foreclosure. So, with the country on track to face ten times that amount of foreclosures this year, with 1.7 million U.S. homeowners already getting some kind of foreclosure-related notice between January and June of this year, that means one in every 78 homes is facing foreclosure already.

Given these staggering figures, you might be wondering: Are you one in a million?

Understanding the ins and, most importantly, the outs, of foreclosure can prevent you from being hurt by the lingering home crisis. Here are steps in the foreclosure process, including what causes a bank to repossess your home and what you can do to prevent it:

Step 1: Delinquent Payments: If you are delinquent on a mortgage payment by 30 days or more, your mortgage lenders may send a notice that your house is in foreclosure—the first sign of the foreclosure process.  If missing a payment is unavoidable and you receive notice of a pending foreclosure, your first best step is to notify your bank about your financial situation, followed by a quick call to a qualified bankruptcy attorney who can help stop the foreclosure, not to mention help you to keep your home, through a Chapter 13 filing.

Step 2: More notices and notifications: While procedures vary from state to state, if missing mortgage payments becomes the norm, your lender will likely follow up their initial notice with more contact via phone and mail that foreclosure proceedings are officially under way. In this case, again, it’s best to contact a bankruptcy attorney as soon as possible. Your bankruptcy filing can stop lender harassment and contact, and get you back on the road to financial recovery.

Step 3: Eviction: One of the toughest parts of the foreclosure process is an eviction. Even though it can take more than a year for a bank to repossess your property, an eviction means you’re out in the cold, stripped of a home of your own. Chapter 13 bankruptcy can prevent eviction, allowing you to stay in your abode not only during your bankruptcy, but throughout the three to five year repayment process, and depending on your jurisdiction’s laws, possibly bring your mortgage payment down.

Step 4: Foreclosure auction or sale: Barring a bankruptcy or a modification from your lender, your home will likely be repossessed. The bank then owns your house and is entitled to sell it at a foreclosure auction or using a short sale. As such, any proceeds from these sales remain with the bank, leaving you with no roof over your head and no equity for your troubles.

Don’t wait for your own housing bubble to burst. Join the millions of American homeowners who have found immediate help to keep their hard-hit homes. If you have been effected by the mortgage crisis, knowing a qualified bankruptcy attorney can help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Tuesday, July 13, 2010 @ 1:25 am

No one likes surprise expenses, especially when we’re already struggling to get by.

Countless bankruptcies can be attributed to the use of credit to handle an emergency, especially when they involve our homes. Sure, emergencies involving the home are why we have home insurance but you still have to pay a deductible and more than likely, there are always extra costs you won’t expect.

Plus, there is a ripple effect to having to take care of major home repairs. What if you have to stay home from work one day to meet contractors but your boss just doesn’t want to hear about another one your personal issues impacting your monthly quotas? Think that doesn’t cost you in the long run? Or, what if the roof damage led to rain and debris in your closet, making that outfit set aside for tomorrow’s job interview look more like a dust rag than a job winner?

While there is very little you can do to combat the Wrath of God being inflicted on your home, you can engage in a number of fundamental tasks to prevent standard maintenance issues from becoming bankruptcy-worthy budget crushers.

Spending money on your home is a tough sell for those experiencing debt problems. There have been a number of studies released recently that suggest when it comes down to choosing what bills to pay when under financial duress, the majority of people opt to pay credit cards before their mortgage. However, since you can almost always save your home in a bankruptcy, it makes great sense to do all you can to preserve its value, especially in today’s market.

For starters, get up on a ladder and clean those gutters.

Gutters? Really?

Clogged gutters lead to more roof and siding damage than fallen trees or other forms of direct weather damage. If water is forced to go elsewhere other than the downspouts, it will carve a path under the fascia and behind the siding. Water will find its way down and when it discovers a new path, it tends to follow it frequently. And in case you’re not convinced of the damage water can do, Google “The Grand Canyon.”

Poor drainage around your home can also lead to pest infestations, as termites and other critters like to be around things that are rotting, like the wood in your foundation, and also corpses. Provided you’re not moonlighting as a coroner, then wet wood under your home should be your primary concern. Even if you have a crawlspace, put on some old clothes and as best you can, poke around under there to just check on things.

You don’t need to be a home inspector to use a broom handle to knock on support beams to check their strength. Get a Maglight and scan under the house for anything that looks unusual. If you do suspect something, then it helps to spend a couple of hundred dollars on an expert’s opinion. And even those with ongoing pest control installations are surprised to learn they have an infestation of some kind, so don’t think a few cans of pesticide around the house make you immune to wood-destroying insects.

It’s important to look for mushrooms, moss or other weed build-up along the sides and corners of your house. If water is collecting, the moisture augments the growth of such plants, possibly indicating poor drainage.

If you’re not afraid of heights and can stay safe, poke around at the vents on your roof for damage, paying close attention to the runner “boots” and seals that surround their base. If cracked, they can become another source of water getting into places where it doesn’t belong.

From the Law Offices of John T. Orcutt. Call today, 1-800-899-1414 for a free initial consultation.

Durham bankruptcy attorneys. Raleigh bankruptcy attorney. Raleigh HAMP modification. North carolina Bankruptcy Lawyers. Bill Collectors North Carolina. Chapter 13 in North Carolina. Durham NC Debt Consolidation.

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Published Wednesday, July 7, 2010 @ 8:53 am

News just moved from bad to worse for many homeowners seeking shelter under the Obama Administration’s Home Affordability Modification Program (otherwise known as HAMP).

Recent government figures show that the average beneficiary of the administration’s flagship homeowner-assistance program owes their mortgage lender more than $1.50 for every dollar their home is currently worth. As a result, many more homeowners than expected are underwater (owing more than their homes are valued), facing foreclosure and will likely be forced to walk away from their mortgages in the near future.

As The Huffington Post reports,  “A recent study by Federal Reserve economists shows that underwater homeowners are, not surprisingly, much more likely to default on their mortgages. Moreover, borrowers who are deeply underwater — like those in HAMP, who average negative 50 percent home equity — are far more likely to default willingly; that is, to give up on trying to overcome their growing mountains of debt, and just stop paying at all. This revelation underscores the problems with the path taken by the Treasury Department to help homeowners, who merited federal attention only after the government gifted the banks and Wall Street with hundreds of billions of taxpayer dollars to survive a financial meltdown largely of their own making. Rather than designing a program exclusively focused on homeowners, the administration chose to set up an initiative that seeks to balance the needs of homeowners with the interests of lenders and investors. Thus, while the average homeowner in the program is saving more than $500 a month, 28 percent more homeowners have been bounced from the program than have been helped. Homeowners that receive permanent reductions in their monthly mortgage payments end up deeper underwater than they were before they were ‘helped.’ Meanwhile, lenders and investors continue to foreclose on properties at a record pace.”

This result is shocking considering the HAMP’s costs and the fact that the $75 billion plan was recently reworked in an attempt to help those hardest hit by the housing crisis—targeting homeowners who were unemployed; underwater in their mortgages; or even those homeowners who are bankruptcy bound.

Coincidentally, as American homeowners search for more immediate and steady mortgage help, many are instead turning to the simplicity of bankruptcy to stop their impending foreclosure and other creditor actions. In fact, unlike HAMP, bankruptcy seems tailor-made to help beleaguered mortgage holders to hold on to their homes if they can afford to pay their arrears through a  Chapter 13 bankruptcy plan; or, instead, walk away without fear of lender reprisal (via either Chapter 13 – in most circumstances - or Chapter 7). So, if you’re having trouble making your mortgage, living in a home that will never accrue equity, and/or residing in an area that is currently devalued and will be nothing by a blight on your budget for the foreseeable future, bankruptcy can help get you back on the right side of the proverbial tracks.  A bankruptcy will allow you to surrender your underwater home, negate your personal and financial liability, and move forward financially in a new, and most importantly, affordable place.

Your first best on the road to an effective bankruptcy is knowing a qualified bankruptcy attorney who can help you to conquer your mortgage creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond a recession that has “HAMPered” many a homeowner. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Monday, June 21, 2010 @ 2:30 pm

While those that analyze esoteric financial trends and market conditions seem to think that the recession is easing, a large portion of the country aren’t so quick to agree. With foreclosures still prevalent and personal bankruptcies at a level close to that of 2005’s pre-code change flood, there are plenty of reasons for Americans to still be on edge about their finances.

A recent survey by the Associated Press and its polling partner Gfk indicated that 46 percent of families are still not confident in the status of their economic situation.

The sense of financial stability in the country can be compared to the local weather forecast. With the heat and humidity here in North Carolina, an actual temperature of 90 degrees could actually feel like 96. The “real feel” temperature they call it. And in the end, isn’t that the only thing that matters? After all, the numbers are subjective, just like economic stats. If a person doesn’t have a job and is on the verge of bankruptcy, what difference does a spike in the consumer confidence index make? In fact, what the heck is a consumer confidence index? Who comes up with this stuff?

What is clear is that the job market still stinks. Compounding the job issue is the foreclosure epidemic. The two factors are tightly bound to one another. And the statistics in the housing market are just about as confusing and erratic. New home starts are up but sales are down. Agents keep talking about how great a market it is to buy but fail to mention how difficult it is to secure a mortgage. Man, lots of conflicting information about there, huh?

Ultimately, polls like the one conducted by AP-Gfk are as equally nonsensical. A person’s outlook on the economy is completely independent of the condition of the country as a whole. There are many people who have found a way to succeed in this economy and are making more money than they ever have. Therefore, a poll is going to find them fairly confident about their odds of avoiding bankruptcy and the economy in general. Heck, pretty much anyone who has a job right now is going to respond positively.

There are some benefits to the ongoing fear of the country’s economic status: more people are remaining aware of the pitfalls of long-term debt. Penny-pinching is becoming chic and credit cards are no longer yanked out of wallets like a six-gun sidearm.

Nevertheless, people are still pretty worried about what’s going on out there. If you’re having trouble keeping your head above these troubled economic waters, talk to a bankruptcy attorney today. A Chapter 7 bankruptcy will help you eliminate all of your unsecured debt, freeing up your money for more important things. A qualified bankruptcy attorney can also discuss whether a Chapter 13 bankruptcy might be a better option. A Chapter 13 can help you get caught up on your house and car, and keep you out of foreclosure. In North Carolina, John T. Orcutt has the experience you need to get a fresh start. Call 1-800-899-1414 today to set up your free initial consultation, or visit www.billsbills.com to fill out our debt questionnaire. Don’t wait another day.

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Published Friday, May 14, 2010 @ 8:20 am

Don’t call him a repo man. But if you are behind on the house payments, he’s coming for your keys.

In what can only be considered a sure sign that the current housing crisis is unlike any other, banks are now deploying professional “mediators,” to visit struggling homeowners to negotiate a settlement, which usually ends up with the homeowner accepting a check and the bank changing the locks. In the same day.

Long the route taken by banks to seize cars from owners who, for one reason or another, could no longer make the payments, repossession is now a strategy being used by mortgage lenders across the country.

While car repos are often done surreptitiously under the cover of night by shadows darting in and out of garage-mounted motion lights, those sent to take back your home come in the light of day. In suit and tie with hands crossed, they appear on doorsteps like harbingers of future financial doom. It’s a doorbell ring that will often be the last one a family hears in their home.

Joseph Laubinger is a home taker. He comes to settle the final details for exiting the home in a legal but relatively hassle-free way. “Here is your check,” he may say. “Now, can I have your keys?”

Banks employ Mr. Laubinger to run the middle ground between forgiveness periods and foreclosure. In other words, after everything has been said and every step taken before the inevitable, he shows up to smooth things over.

However, he doesn’t just come to hold the door open while you and some friends carry boxes of china out the curb. He is often sent in the early stages to talk to families about their options and to explore early alternatives before things escalate. When sitting at the kitchen table, he often gets the same question. “People ask me how much time they have left,” he said.

And he has been getting that question a lot lately.

Currently in America, more than four million households nationwide are “severely” delinquent in their mortgages. Industry experts report that the first quarter of 2010 has seen more mortgage failures than at any other time during “the crisis.” Close to 250,000 homes have been taken over by their lenders since the start of the year. Laubinger’s job is to make the exit process a bit easier for everyone.

Foreclosure is an expensive option for banks—and they don’t like it. Families that meet people like Laubinger don’t have to accept his offer, but as one might imagine, it’s often a hard one to refuse.

Many homeowners are becoming more brazen in the defense of their homes. They know there is no legal grounds on which they can be evicted until the foreclosure process is made formal. Thus—out of spite in most case—people can hang around just to tick off their mortgage lender.

In the majority of cases, bankruptcy can save a debt-stricken family’s home. In a Chapter 13 bankruptcy, the mortgage lender must accept the terms of a 5 year repayment plan. By also getting rid of your unsecured debt, a Chapter 13 bankruptcy can put you in a better position to succeed after bankruptcy.

Laubinger’s company is expanding rather rapidly. He has moved tables and chairs into his garage as a makeshift office to train a couple of new employees. He currently roams the Midwest, working for Fannie Mae (the government) and regional banks. But don’t think he, or folks like him, won’t be making headway to North Carolina in the near future. Just listen for the doorbell.

If you’re behind on your mortgage, call the Law Offices of John T. Orcutt today. In North Carolina, call 1-800-899-1414 for a free initial debt consultation or visit www.billsbills.com for more information.

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Published Thursday, April 1, 2010 @ 10:48 am

Are you feeling too broke to break out of debt? For those ready to end the cycle of debt, it is important to understand that bankruptcy is not a one-size-fits-all solution, and bankruptcy filings are complex cases catering to your individual economic needs.

Bankruptcy, like so many areas of the law, is in a constant state of evolution, having been refined and redefined over the decades and through several important pieces of legislation. The first major bankruptcy legislation since the Chandler Act of 1938— Bankruptcy Reform Act of 1978—brought some of the most significant changes to the U.S. Bankruptcy Code. Within this Act, there were a host of important changes that the Act brought to the U.S. Bankruptcy Code—changes that can help you in these tough financial times:

(1) The Bankruptcy Reform Act of 1978 introduced Chapter 13 bankruptcy protection. Referred to as a wage-earner reorganization bankruptcy, this new type of bankruptcy can now stop foreclosure on your home or restructure your consumer debt into a more manageable payment plan— allowing debtors to pay back what they owe over time, often at a percentage of the cost.

(2) For the first time, this act also allowed married couples to file a joint bankruptcy. Because husband and wife file a single bankruptcy case pursuant to these rules, only one filing fee is paid to the Clerk. These days, considering the fact that the filing fee for Chapter 7 and Chapter 13 bankruptcy can be hundreds of dollars, and attorney fees ranging even higher, this results in major savings. Married couples should consider filing jointly filing when most debts are jointly held between as is often the case of credit card debts, mortgage loans and automobile loans.

(3) The legislation also introduced additional exemptions for filers, allowing individuals, for the first time, to keep most, if not all, of their property. Assets you can keep in bankruptcy can include certain retirement plans, education funds, and even real property under homestead exemptions.

(4) The act reorganized various chapters of the Bankruptcy Code. Specifically, Chapters 5, 6, & 7 were changed to Chapter 11 bankruptcy. For the first time, businesses filing for bankruptcy after the act began using Chapter 11 bankruptcy. Today, Chapter 11 bankruptcy is a form of bankruptcy reorganization available to individuals, corporations and partnerships. It has no limits on the amount of debt and is the usual choice for large businesses seeking to restructure their debts.

With the legislation Bankruptcy Reform Act of 1978 bankruptcy reforms were highly substantive and substantial, shaping the law to the needs of a public eager to get a fresh financial start. These specific efforts and exemptions are the primary reason that it is important to have a good bankruptcy attorney on your side; someone who is familiar with the process and knows precisely how the latest laws can assist you.

Well, it’s finally time to halt the hesitation, dismiss the deterrents, and suffer no more; because, in fact, the opposite can be true in the world of bankruptcy law. Days, weeks, and months wasted without speaking to a qualified bankruptcy expert can actually add up to higher bills, increased interest and greater stress—creating a costly cycle of creditor-debtor “cat-and-mouse”—that you continue to pay for—with the constant risk of losing even more.

Specifically, the bankruptcy attorneys at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Friday, February 26, 2010 @ 4:19 pm

Everyone—from the halls of Congress to the many channels of media—is paying a ton of attention to those Americans who have lost their homes in the seemingly endless mortgage meltdown. Virtually ignored have been the millions who continue to pay their mortgage every month, even when they really can’t afford to. As a result, most homeowners are losing big on what used to be their biggest investment.

Which begs the question: Is the best solution to stop paying your mortgage?

For homeowners around the country who haven’t skipped their mortgage payments—but are seriously struggling—there are several reasons why homeownership is going less than swimmingly:

You’re Trying to Staying Afloat While You’re Underwater
Many of you are struggling to pay off a mortgage balance that is significantly higher than the value of your home. As a result, selling your home is simply not an option, since you would ultimately have to come up with the difference to settle with your lender.

You’re Drowning in the Deep End of Debt
Many homeowners just like you are spending down their savings, taking cash advances and/or relying on credit cards to buy bare necessities. Why? Because you’re using every actual dime that’s coming in to keep up with your mortgage payments. The result is millions of Americans who are not only underwater on the their mortgages, but who are also drowning in debt.

While staying current on your home commitment is admirable, and very much the American way, it’s also a quick and easy way to drain your savings, retirement, or nest egg, while also accumulating enormous debt, simply to avoid the dreaded “F-word.”

Consider Foreclosure
While it can be scary, this particular “F-word” can be your first, best step to a pair of “F” positives: financial freedom. If you are now hundreds of thousands of dollars underwater and go into foreclosure, your losses are essentially erased. In most cases, your lender can take the house, but not your future earnings with the only real financial consequence being trouble getting a loan for almost a decade (in an era when getting a loan isn’t easy even for those with stellar credit).

Unfortunately, most foreclosure alternatives are simply bad ideas. Let’s take, for example, the short sale. In a short sale, the lender is agreeing to accept less than what is owed to satisfy your loan. Assuming you find a buyer, you will then have run the offer by your lender. Even if they decide to go along with it, you could still be stuck with the deficiency if you’re not careful. That’s not to mention the tax implications of the forgiven debt. Why go through the hassle of a short sale, if it’s just as likely to hurt your credit, and may lead to even more debt.

Another foreclosure alternative, the loan modification, would be an option if lenders were granting permanent modifications. The problem is, most lenders are understaffed, behind on applications, and you’re likely to get lost in the shuffle. As of 9/1/09, over 362,000 loans have been granted a trial modification. Of those trial modifications, only 1,711 have been approved for permanent modifications.

And Then There’s Bankruptcy
If your credit score is going to suffer anyway, why not create a completely clean slate? As a hurting homeowner, knowing a qualified bankruptcy attorney can also help you face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future.  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Friday, February 12, 2010 @ 5:44 pm

The Making Home Affordable program was designed to be the savior of the crashing real estate economy. People nationwide were taking solace in the President’s effort to save our homes and lead us through the worst economic situation our country has faced in almost 100 years. Hundreds of thousands of homeowners facing foreclosure due to the bubble bursting on a plague of poorly schemed sub-prime mortgages rejoiced in what seemed to be a cooperative effort on the part of the a supportive new Washington administration and the Wall Street.

Unfortunately, the program has landed far from expectations. The foreclosure rate has seen only minor blips in decline and it has become difficult to hear government officials even address the existence of the program, unless to defend it. Additional programs have been introduced to support it but larger menu items are being devoured by the House and Senate and the status of homeowners has been given a backseat. Meanwhile, the numbers of properties in foreclosure and pre-foreclosure continue to grow.

Accepted into the trial HAMP modification program for six months, Bert Carvajal of south Florida was eventually denied full participation in the President’s program. He was also deemed ineligible for any assistance from his lender, JPMorgan Chase. His situation is no different than that of most Americans in trouble with their mortgage. His construction management income was sapped by a declining housing market and he simply fell behind on the payments that keep a roof over his family. He is now behind on property taxes too, so he owes his bank and the county.

Mr. Carvajal’s best option may be to soon file bankruptcy. In Chapter 13, he can catch up on the missed mortgage payments, and pay back the property taxes over a period of up to 5 years.

Jag Bhangu was also recently denied a mortgage modification because he still has equity in his home. However, that doesn’t mean he can afford to pay for it. And, given his position as a mortgage consultant, one would think the bank would by sympathetic to his situation of lost income. In the last couple of years, his income dropped 70 percent from where it was when he was approved for the loan.

Bhangu was granted a trial modification under Obama’s plan for nine months but then declined for permanent adjustment. He continues to speak with people at CitiGroup about another modification but he is not hopeful that it will happen.

If you’re getting the runaround from your mortgage lender, talk to a bankruptcy attorney today to discuss how a Chapter 13 can help you and your family hold on to your most precious asset- your home. Call today. In North Carolina, contact the Law Offices of John T. Orcutt for a free initial debt consultation. 1-800-899-1414. Or visit www.billsbills.com and fill out our debt questionnaire. With offices in Raleigh, Durham, Wilson and Fayetteville, help is just a phone call away.

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Published Tuesday, February 2, 2010 @ 2:30 pm

Many of our clients automatically assume they will lose their rental property if they file for bankruptcy. Isn’t that the whole idea of bankruptcy? That you give up everything you have, with a few exceptions, in exchange for getting the debt collectors off your back?

Well, no. Many factors come in to play in determining whether or not you will be forced to sell your rental property, including whether you file chapter 7 or chapter 13, how much money you owe on the property and how much income you receive from it.

Let’s start with chapter 7. If you file chapter 7, you get an exemption for the equity in your primary residence – how much depends on the state you live in – but rental property doesn’t qualify for the standard residence exemption. Therefore, you will only be able to protect the property from sale if you can cover it under your available wildcard exemption. The North Carolina wildcard exemption is $5,000.00 per filer- not much. However, your state may have additional protections if you own the property jointly with your spouse. In North Carolina, if you own the property jointly with your spouse, the property is only subject to claims of joint creditors. If all of your debt is in the name of one spouse or the other, the property may be protected- regardless of the amount of equity. Talk to a experienced bankruptcy attorney, who can examine how you hold title and if you have any joint debt.

But what if you don’t have any equity in the house, or minimal equity? What if, for example, the house is worth $100,000 and you owe $120,000, or even $99,000? The trustee’s job is to determine whether or not there is money for your creditors, not to take away everything that belongs to you. He will determine the property’s worth, then subtract the projected sales costs, selling it and paying taxes on the proceeds. If it’s not worth the trustee’s time and effort, it’s unlikely that he will try to sell it.

With Chapter 13, there are additional caveats and concerns. In general, you should be able to keep your rental property in a Chapter 13 filing. In fact, since the rental property is not your primary residence, you might be eligible for cramdown under chapter 13 – meaning that if you owe more than the property is worth, the bankruptcy judge is able to alter the terms of the mortgage to reflect the property’s current value rather than the amount you originally agreed to pay for it. This could lower your monthly mortgage payments, as well as the long term amount you have to pay to the bank for the property. Cramdown isn’t allowed on primary residences, but it is allowed on other secured debts, including rental property.

Do note, however, that rental property can, under certain circumstances, cost you money. The trustee in a Chapter 13 case will look at all the costs associated with the property – your mortgage payments, plus taxes, insurance, upkeep and repairs. If these costs outweigh the income the property brings in, the trustee may object to your plan on the basis that the money you’re spending on the property should be distributed to your unsecured creditors. In such a case, surrendering the property may be your best option. However, this is a very fact-sensitive issue and depends on how your jurisdiction interprets very complex provisions of the bankruptcy code. Only an experienced bankruptcy attorney can advise you on your specific situation. Bottom line- if you’re deeply in debt, talk to a bankruptcy attorney and get the real facts. In North Carolina, call the Law Offices of John T. Orcutt. Convenient office locations in Raleigh, Durham, Wilson and Fayetteville. Call today: 1-800-899-1414 or visit www.billsbills.com for more information.

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Published Monday, February 1, 2010 @ 4:15 pm

Can your landlord evict you if you declare bankruptcy? That depends on the circumstances. If you’re not behind on your rent, your landlord may never have to know about your bankruptcy. As long as you keep paying your rent, it’s not really his business. A landlord can’t evict you just because you filed for bankruptcy.

If you are behind on your rent, however, the landlord is in a different position. If he’s already completed the proceedings for eviction, the landlord can proceed to evict you, despite the bankruptcy. Some states do not allow you to challenge this procedure. In states where you can challenge it, the proceedings are fairly onerous: you must file a paper stating that state law gives you the right to tenancy if you pay all the back rent, and immediately pay any current rent that is due. Then you have 30 days to pay all the back rent that you owe. If you don’t comply with these regulations, then eviction proceedings can continue. Note, too, that this doesn’t apply in the event that the owner can prove you’ve been doing drugs on his property or damaging it.

If the owner hasn’t yet filed for eviction, you’re in a much stronger position. Once you file for bankruptcy, the court imposes an automatic stay, which prevents the landlord from evicting you. The landlord can, however, apply to the court to lift the stay. In this case, eviction proceedings could begin in 2-4 weeks. You can use that time to look for a new place. Also, remember your rights during this time: the landlord cannot lock you out or remove your property until he gets a court order; he can’t barge in and he can’t threaten you. The sheriff can serve eviction papers, but she can’t arrest you.

If the landlord doesn’t apply to the lift the stay, you will have the length of the bankruptcy proceedings before eviction proceedings resume. Once again, we have the 2005 bankruptcy law to thank for this tilt of the law in favor of the creditor against the debtor. The law specifically allows for a ‘fast track’ proceeding to make evictions easier during bankruptcy.

Note, however, that filing for bankruptcy can still be helpful if you’re behind in your rent. If you owe back rent, that is included as a part of your unsecured debt – to be discharged in a Chapter 7 bankruptcy, or paid out over time or partially or fully discharged in a Chapter 13 filing.  Any rent that comes due after you file for bankruptcy won’t be included in the petition, however, and you will remain responsible for it.

As a final point, there are a few rare cases where your landlord might become involved in your bankruptcy even if you’re current on the rent. If you paid a rent deposit when you moved in, you have to list it as an asset. Unless it’s an extremely large security deposit, however, it’s most likely exempt and the trustee won’t bother with it. In addition, if you’ve filed for Chapter 13 bankruptcy, the trustee will examine your lease. Most likely he will approve it; moving is expensive and it’s not in your creditor’s interest to have you shelling out money to find and move to a new place. You’d only be forced to move in the unlikely event that you’re paying way over market value for your apartment and there are an abundance of cheap places available.

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Published Sunday, January 31, 2010 @ 6:10 pm

As the mortgage crisis continues on, ironically, President Obama seemed right at home at the podium during his 2010 State of the Union address just as millions of Americans face losing their home. As a result, many concerned citizens sought in the President’s national address any signs not only of “hope” or “change”—expressions made famous during his campaign days—but also second year specifics about what a new year would mean for the millions of average Americans, just like them, facing imminent foreclosure.

In that address, the President laid out an ambitious agenda attempting to attack one specific problem from every conceivable angle: the terrible economic squeeze on America’s middle class.  One portion of his plan mentioned helping Americans stay in their homes, retain their home’s value or absolve home debt, as the President works to “lift the value of a family’s single largest investment.”

President Obama revealed he intends to “step up” programs that encourage re-financing for affordable mortgages. Yet, while the President made clear that he would be increasingly busy in his second year on many fronts, many critics charged that his speech, as well as homeowner assistance policies to this point, has been short on specifics of how to put government to work for those average Americans facing the loss of their homes.

Under the President’s current and primary homeowner assistance plan, the Home Affordable Modification Program (or HAMP),  “responsible borrowers” who have unpaid principle balances of less than $729,750 (for one unit) from a mortgage originating prior to January 1, 2009 may qualify for loan modification assistance if your mortgage payment is greater than 31% of your monthly gross (pre-tax) income.

In addition to flack the President received for only providing housing help for the fuzzily defined “responsible homeower,” apparently the plan, as of last month, has been less than successful for even the most responsible of borrowers. According to a recent Treasury Department report, 27 percent of the 650,000 homeowners taking part in the mortgage modification program are now delinquent on their mortgage payments.  In fact, only 1,711 participating homeowners attempting to avoid foreclosure have been able to convert their modifications to permanent status. Homeowners facing foreclosure and needing help to secure a loan modification have been encouraged to visit http://www.makinghomeaffordable.gov.

To clarify, this type of organized modification effort does not constitute a refinance as the President spoke of; it’s simply a retooling of the mortgage, including a term that might be extended or an interest rate that could be adjusted.  Yet last night, the only thing the President said about the help distressed homeowners might get was this:

The steps we took last year to shore up the housing market have allowed millions of Americans to take out new loans and save an average of $1,500 on mortgage payments. This year, we will step up re-financing so that homeowners can move into more affordable mortgages.

The President never specifically mentioned HAMP, how HAMP might need time to work, or how it could be fixed.  And, most notably for some, he did not mention the word “foreclosure,” at all.

So, as foreclosures continue to escalate, American homeowners may feel that they have increasingly fewer options other than bankruptcy. Of this option, the President had a more definite response, with recent efforts to allow bankruptcy proceedings to renegotiate all debts, including home mortgages.

As American homeowners search for more immediate and specific mortgage help, many are turning to bankruptcy to stop foreclosure and other creditor actions. For reliable bankruptcy advice that you can trust, contact The Law Offices of John T. Orcutt for a totally FREE consultation at 1-800-899-1414.

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Published Monday, January 25, 2010 @ 6:57 pm

Ugh. Debt. These days most Americans are sick of hearing the d-word. And who can blame us? Americans are in more debt now than ever before. Avoiding debt seems impossible…there are so many things you can’t even do without credit cards or loans that we now take debt as a matter of course. Despite our negative feelings about debt, Americans want to repay what we owe. In fact, this noble instinct is what keeps some people from filing for bankruptcy when they desperately need to do just that. Not only are people afraid of having a negative impact on their credit scores (which in fact may already be in the basement), they also feel that the right thing to do is pay back debt.

When it is possible, paying back debt is the right thing to do, no doubt about it, but most people who declare bankruptcy don’t end up in a bad situation because they made negligent mistakes or don’t feel like paying; instead, dealing with the curve-balls life throws at us can prevent us from meeting obligations. By the time people opt to declare bankruptcy, they are not unwilling to pay back debt they simply can’t. The thing to remember is that creditors know that and take these factors into account. This is the reason creditors charge higher interest rates when they extend unsecured credit. If bankruptcy is the right decision, you shouldn’t allow misgivings about not paying certain kinds of debts hold you back.

What many people don’t even consider is that declaring bankruptcy can actually help you pay back debts. Consider this example: Say you are considerably behind on payments that are secured by your home or your car. In such a situation, filing for Chapter 13 bankruptcy can allow you to reach a compromise between what is feasible and what your creditors expect. In a Chapter 13 bankruptcy, a repayment plan could save your home from foreclosure by allowing you to catch up on back payments. Similarly, a Chapter 13 repayment plan can allow you to catch up on back payments for your car, helping you to avoid losing your vehicle to repossession. In both situations, the creditor is receiving payments for the credit they have extended, and you are working with a plan you can actually meet. This also applies to debts that you would not be able to discharge in a bankruptcy, such as child support payments and back taxes owed to the IRS. A Chapter 13 plan can help you make up for missed payments in the past while easing the pressure of being hassled and worried about never catching up. Eventually, with a good Chapter 13 plan, you are more likely to succeed in getting current on all your required payments.

A strategically timed bankruptcy can also help you in those situations where you may be able to pay off all your debts by selling assets, but you simply need more time. With aggressive creditors hassling you constantly, you may end up selling assets for less than they are worth, just to do so more quickly or to avoid penalties. This could land you with debts still to be paid and no assets to boot. A typical example is if your home is foreclosed on. Your home is not likely to sell for what it is actually worth if it goes through foreclosure. This means that you will no longer owe the mortgage company, but you will also lose the value in your home, if any, that exceeded the value of the mortgage. By declaring bankruptcy and forestalling foreclosure, you reap the actual benefit of your investment and potentially pay back everyone you owe.

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Published Sunday, January 24, 2010 @ 8:18 am

Brent T. White, a law professor at the University of Arizona, has a provocative new study out, “Underwater and Not Walking Away.” He points out that as many as 32 percent of all homeowners are ‘underwater’ on their mortgages – they owe more money than their houses are worth. The media has produced a series of articles decrying homeowners who simply stop paying on these ‘upside down’ mortgages as irresponsible and even obscene. In fact, White notes, less than three percent of people whose primary residences are foreclosed on are people who could have continued to pay their mortgages. There are no discernible difference in foreclosure rates in places where housing prices have dropped steeply. Rather, foreclosure rates closely track unemployment rates, suggesting that it’s generally people who lose their jobs and are no longer able to pay their mortgages who lose their homes to foreclosure.

This is true even when it would make more financial sense for people to walk away. Nationwide, housing prices have dropped 30 percent since their peak in 2006; in some cities, drops have been much steeper. Parts of California, for example, have seen drops of 65%. The result is that many people could pay rent on a new house at only a fraction of their monthly mortgage. Homeowners in this situation could save tens of thousands of dollars by walking away. So why don’t more of them do so?

Emotions of fear, guilt and shame come together to encourage people to act against their own self-interests, White argues. There’s a concerted message being put out not only by the banking industry, but also by the government, the media and even non profit consumer counseling agencies that ‘good people’ live up to their responsibilities and don’t walk away from their obligations. That message is allowing the banking industry to shift not only the responsibility, but also the consequences, of the housing crisis entirely onto the shoulders of homeowners.

Certainly there are some negative consequences to society of walking away – foreclosures tend to cluster in neighborhoods, and neighborhoods with a large number of foreclosed homes often become run down and dangerous. But what about the consequences to society of staying and struggling to pay these huge mortgages? Doesn’t that empower a banking industry that made poor decisions and led the economy into this trap?

White points out that in a stable housing market, a house should be about 15 to 16 times the price of a year’s worth of rent. In some markets, the average mortgage being written was 38 times the price of a year’s rent. Shouldn’t the bankers, experts in housing prices, be held to some account for writing these kinds of mortgages and letting housing prices get out of control?

The guilt, shame and fear that White writes about seems to apply only to consumers. We see this echoed in the way people think about credit card debt and bankruptcy. When consumers are unable to pay their debts, they are somehow shirking their responsibilities; when banks can’t pay what they owe, they find themselves ‘undercapitalized.’

This isn’t to say that financial irresponsibility should be more acceptable. However, maybe we need to rethink the way we hold consumers to a higher moral standard than lenders, and instead force the same financial accountability on all parties.

If you’re considering letting your house go, protect yourself from deficiency liability by filing for bankruptcy. For more information, visit our website www.billsbills.com and call to set up your free initial debt consultation. Serving North Carolina families since 1995, the Law Offices of John T. Orcutt.

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Published Thursday, January 21, 2010 @ 11:50 am

The latest chapter in the Obama administration’s attempts to make lenders modify mortgages is to send SWAT teams – no, I’m not kidding, really, SWAT teams – into the call centers of major lenders to try to ensure that they follow the proper procedures and actually modify loans. Seriously, wouldn’t it be a whole lot easier just to pass cramdown and allow bankruptcy judges to modify mortgages than to try to sweet talk, bribe or otherwise convince bankers to do it on their own?

Because they’re not. Making Homes Affordable, the program implemented by the government last May, is designed to encourage banks to modify the loans of homeowners who are having trouble making mortgage payments. Mortgage companies are reluctant to do that, however: they make more money in interest and fees when a mortgage goes into foreclosure, than they make from the government when they successfully modify it. The government had hoped to have 3-4 million mortgages modified by the end of last year. As of mid December, the count was at 750,000 – the vast majority of those were still in the trial stages.

The news reports of lenders dragging their feet are backed up with anecdotal evidence from homeowners, who report that they call the lenders over and over, file and refile the same documents, and then call back, only to be told that no one knows anything about their case. Lenders counter that people don’t send them the requested documents. Really? Desperate homeowner, one last shot at keeping their home, and they can’t be bothered to fax some papers? The lender argument is a little hard to believe.

Hence, the SWAT teams. These are teams of three people, sent into the call centers of the seven largest loan servicers to make sure that the bank representatives are giving accurate information, filing forms properly, etc. Experts are not impressed – many say the initiative is unlikely to work. Some have called for putting permanent government observers in the call centers. They note that private insurers already have their people inside the call center, to help prevent the loans they’ve insured from going into foreclosure.

Unfortunately, neither temporary nor permanent government observers in the call centers seems likely to work. This is another initiative – like the ‘foreclosure hall of shame’ that was supposed to embarrass the lenders into modifying loans – that the banks will evade and ignore until the administration acknowledges it isn’t working and moves on to something else. The fact is, lenders aren’t going to modify substantial numbers of mortgages until they are forced to. Unless an initiative like cramdown is passed, which takes the decision to modify or not and how much out of the bank’s hands and gives it to a neutral party, foreclosures will continue to rise.

Fortunately, homeowners finding it difficult to pay their mortgage may have another option to save their home: bankruptcy. Your bankruptcy attorney will return your phone calls, keep your files organized, and not make you fax documents four or five times. In addition, he or she will help you map out a plan that will lead you to financial freedom. The Obama administration may sincerely want to help homeowners. But as long as they expect bankers to do it out of the kindness of their hearts, you’re probable better off filing for bankruptcy.

Brought to you by the Law Offices of John T. Orcutt. Providing North Carolina homeowners real foreclosure relief since 1995. Is your lender not working with you? Call today and find out how a bankruptcy can save your home. 1-800-899-1414. Convenient offices in Raleigh, Durham, Fayetteville, and Wilson.

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Published Tuesday, January 19, 2010 @ 11:23 am

In the Preventing Foreclosure series, you’ve received an introductory look at how to stay in your home, either through bankruptcy proceedings or via negotiations with your mortgage lender, with later discussions specifically devoted to how Chapter 13 or Chapter 7 bankruptcy proceedings can force creditors to end their collection activities and delay a foreclosure sale.

In Part II of this six-part series, we elaborated on the ins and out of working with your mortgage lender, including timelines, terms, and trends, including forbearance, mortgage modification, loan reinstatement, and the short sale. Here, we’ll expand on the process behind the real estate concept of a  “short sale,” including the ins and outs of this option for homeowners seeking to avoid foreclosure and settle with their lender.

Part V – The Short Sale

If you’re one of many mortgage holders in arrears due to a recent job loss, extended unemployment, medical costs, divorce, or just an adjustable rate mortgage that’s on the rise, you may be facing foreclosure. But, foreclosure can ruin your credit and make it impossible to acquire a new home, leaving you without your biggest and best asset in an uncertain economic climate.

You may have heard of one alternative to foreclosure: the short sale. A short sale occurs when the outstanding loan against your home is greater than what the property can be sold for. For some homeowners, this may be a viable solution. However, for many, it’s just a false glimmer of hope that may leave the homeowner worse off than before the short sale. Here’s a brief overview of the necessary steps of a short sale:

Verify Your Property Value
If you’re using a real estate agent, they’ll provide you with an estimate of market value. If you are selling the property yourself, do your own homework, assessing the market in your area for a proper property price.

Calculate the Costs
Add up all the costs of selling your property, including the closing costs. If you are selling the property on your own, a real estate attorney can help.

Assess the Amount Owed
Determine the amount owed against the property, including all loans, minus the total amount owing against the property from the estimated proceeds of the sale—ultimately a negative number.

Locate Your Lender
Contact your mortgage lender or lenders for their particular short sale procedures. Some lenders are willing to work with you by reducing the amount owed or making other arrangements.

Sell the property
If your lender agrees to a short sale, the next step is hiring a real estate agent—one willing to work for a smaller commission. At the same time, you’ll also need to scale back your own spending as another sign of good faith to your lender. Once a buyer is secured, you can then sell the house for a loss, and, with the lender’s permission, they agree to call it even, with no damage to your credit or ability to procure a new home in the future.

Review the Risks
In addition to the potential that your lender will deny you a short sale, the short sale process does have consequences. Your lender may not be willing to eat the loss, leaving you on the hook for the difference. Make sure they are willing to give you complete forgiveness of the debt, and that they will not hold you personally liable for the difference between what the property sells for and what you owe. Get this in writing. Even if your lender does absorb the loss, the IRS may treat this difference as taxable income, leaving you with a significant chunk to cover come tax time.

As a result, the best alternative is, of course, keeping your home—either by restructuring or reinstating the loan.  Your best bet is contacting a bankruptcy attorney as soon as you start feeling pinched to make the mortgage payment. Chances are you have other unsecured debt that can be eliminated, freeing up more money to pay your mortgage. If you have two mortgages and your home is now worth less than what you owe on the first, a bankruptcy can get rid of the 2nd. That’s right, you may be able to eliminate your 2nd mortgage.

In Part VI, we’ll conclude the Preventing Foreclosure series with a broader look at your bankruptcy options.  And, as always, to learn more about your options, contact the experts at The Law Offices of John T. Orcutt.

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Published Tuesday, January 5, 2010 @ 1:52 pm

Foreclosure is a common precursor to bankruptcy. More often than necessary, it happens before a family really knows where to turn for help.

Worse yet, those who lose their home in foreclosure continue to spiral into debt and end up filing bankruptcy long after it could have been used to help save their home in addition to relieving them from the agony of overwhelming monthly credit card bills and other debts. Fortunately for many citizens of North Carolina, a foreclosure prevention program has become a model for the nation and to date has assisted more than 2,500 of us from having to give back the property we worked so hard to obtain.

Called the State Home Foreclosure Prevention Project, this unique effort provides those worried about making their mortgage payment a hot line that provides advice, counseling and insight on how to work with your home’s mortgage lender to avoid having to surrender your deed back to the bank. While it certainly cannot help everyone who calls, two out of every three families needing help are getting it. And, more than 5,000 additional mortgages are still being re-negotiated.

It was originally created to assist those victimized by the sub-prime loan mortgage crisis but has since been expanded to help homeowners who have traditional loans but may be struggling with their house payment as a result of other debt forms or unemployment.

It should be noted that this program is not a debt or credit counseling service. It is designed specifically for those affected by the swath of spiking mortgage rates that resulted in the systemic plague of foreclosures nationwide, decimating the national real estate market and bolstering our economic demise.

Similar federal programs, such as the Making Home Affordable plan rolled-out last year, have not met expectations. North Carolina has managed, proportionally, to create an impact. The state banking commission has estimated that the total number of mortgages saved to date has stopped $218 million in property value and mortgage holder losses. Should those families currently working with the program be saved, the totals could more than double that number.

Yet, there remain a number of pain points in the state’s efforts to stave off foreclosures. Chris Kukla, a high level government affairs adviser at the Center for Responsible Lending, stated that a number of mortgage counseling companies and other private organizations are doing a “horrible job” in loan reorganization. Whether it be not hiring enough people to answer call-in questions or simply not understanding the paperwork process and related legalities, many of the efforts that have erupted on to the market at the height of the recession are too profit driven to provide real service.

The importance of this program to those considering bankruptcy is that it can help you alleviate one of your largest monthly financial headaches. Understand of course, that it does not eliminate your mortgage, but simply re-aligns it in a more reasonable payment plan. With this added stability, a troubled homeowner could arrive at a less pressure-driven decision to file bankruptcy and feel more confident in the outcome.

Remaining in one’s home is one of the most important factors for someone who files for bankruptcy protection, despite the fact that the majority of those who file do just that — stay in their homes. It seems that over the years, perhaps since the 2005 changes to the bankruptcy law, or maybe as a result of today’s hyper-sensitivity to the housing crisis, the fear of foreclosure has permeated the mindset of everyone facing financial trouble. Between programs like the State Home Foreclosure Prevention Project and the expertise of the bankruptcy attorneys at the Law Offices of John T. Orcutt, you have more than enough ways by which to remain safe and sound at home.

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Published Tuesday, January 5, 2010 @ 6:29 am

The New York Times recently published an insightful article detailing the struggles of homeowners facing foreclosure in the outer boroughs of New York City. At the New York State Supreme Court building in Jamaica, Queens, they come face-to-face with the lawyers representing the banks and the loan servicers that are pursuing foreclosure on their homes. These lawyers oversee large caseloads and don’t appear to the Times reporter have the time to delve into each individual matter.

New York state lawmakers have passed laws requiring lenders to negotiate with homeowners in court. That’s why the court’s docket is full of homeowners facing foreclosure. However, the banks in question, and the loan servicers that represent them, aren’t cutting deals to modify mortgages, despite the efforts of lawmakers to force the banks to do so. As a court referee says in the article, “I have yet to see an attorney for a servicer cut a deal.”

The evidence suggests there isn’t enough incentive for lenders and servicers to try to bargain with homeowners. The federal government has provided small financial incentives to services to allow loan modifications. But, because the servicers also make money from the foreclosure process, especially through fees charged to homeowners, the servicers don’t have as much of a reason to take the federal government’s money.

Even when modification is a possibility, the modification process often breaks down over logistics. For instance, homeowners often struggle to produce all of the paperwork lenders demand to see in order to process a modification. The Times also reports on an initiative to bring the documentation process online, allowing homeowners to store their documents in a database for safekeeping and to electronically track the progress of their modification efforts. A consultant quoted by the Times, however, remains pessimistic, stating bluntly, “[m]arginal improvements are not going to have a significant impact on increasing loan modifications.”

It should be good news for homeowners that the federal and state governments have stepped in to provide incentives for lenders and servicers to modify mortgages. However, an incentive is only an incentive, and sadly, evidence suggests that lenders and servicers generally choose to foreclose rather than modify. If you are a homeowner experiencing difficulty making your mortgage payments or facing foreclosure, relying on modification as a last resort may land you in a lot of trouble.

Filing for bankruptcy, on the other hand, can in many instances protect your home from creditors and keep foreclosure out of the picture. If you have a regular income, a Chapter 13 bankruptcy filing offers the opportunity to catch up on your missed mortgage payments, and your home will be protected by the bankruptcy court’s automatic stay, which stays, or freezes, collections actions, including foreclosures. A Chapter 7 bankruptcy filing may also protect your property, depending on the circumstances and the extent of your other outstanding debt. If you are looking for bankruptcy advice you can trust, do not hesitate to contact the attorneys at The Law Firm of John C. Orcutt.

If you’re one of the many North Carolina homeowners facing foreclosure, contact the Law Offices of John T. Orcutt today to discuss how Chapter 13 bankruptcy can save your family’s home. Call today: 1-800-899-1414.

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Published Tuesday, December 29, 2009 @ 6:00 pm

It hardly seems fair.

Those needing help with a bad mortgage that can be blamed on banking industry profit strategies are now faced with the problem of having their credit ratings ransacked as a result of enrollment in a federally-backed mortgage modification program.

The subprime mortgage crisis forced hundreds of thousands of Americans into bankruptcy or foreclosure. As the government realized, despite its public reticence, that it played a tremendous role in the state of its citizens’ bleak checking accounts, it announced the creation of the Making Home Affordable program, a concerted effort to offer banks financial incentives to adjust their customers’ mortgages at more favorable terms to the customer.

In the program’s wake arose countless private organizations and state-run mortgage assistance efforts. However, deep under the surface of the seemingly endless field of good will grows a bitter small seed of realization that your credit rating will experience increased erosion by entering into a mortgage modification plan… As if the impact of missed home payments and additional debt wasn’t already hard enough to swallow.

Jason Axelrod, a Chicago city employee, was one of many Americans who recently realized that seeking mortgage help would lead to negative consequences. He enrolled in a trial modification a number of months ago, at which point he sustained a reputable credit score of 750. With overtime cut and a quick jump in property taxes, it became increasingly difficult for him keep his monthly payments on track. The mortgage modification adjusted his payments by $565.

Trial modifications are generally intended to last a few months while banks and program representatives collect paperwork and gauge the homeowner’s ability to handle the new payments.

Eight months later, Jason remains in a morass of confusing paperwork and has yet been able to provide his lender with the appropriate paperwork to finalize the trial plan into a permanent one. Oh, and his credit score, despite no additional big ticket items or debt troubles, has dropped by more than 100 points. He was recently offered a car loan at 12 percent interest. He had previously enjoyed a low rate of 4.7 percent.

It is during the trial period that industry guidelines require lenders to report information on those enrolled. Specifically, the credit bureaus want to know a borrower’s status before entering the program. And it is in this reporting effort where the less-than-above-board practices of the credit bureau come into play. Essentially, to the folks at Equifax, Experian and TransUnion, the mortgage modification enrollment process is simply another credit checkpoint, supplied by the government, that they use to collect information on consumers. It’s like shooting debtors in a barrel.

A jointly devised coding program was installed to signify a borrower’s status as a “partial payee.” The presence of this code alone is enough to negatively impact credit standing. The full scope of its impact is based on a number of mortgage payment factors, such as number of missed payments before enrolling in the assistance program.

However, according to the Treasury Department, even those who were current on their mortgage could see their credit score cut by 100 points, simply because they chose to enroll in a program offered by the government.

At the start of September 2009, 24,000 people current with their mortgage entered into trial modifications. Just after Thanksgiving, the total number of trial modifications was just under 700,000. That’s a lot of credit reports. And most likely, a lot of frustration.

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Published Sunday, December 27, 2009 @ 5:31 pm

If the present economic environment wasn’t Scrooge enough, just in time for the holidays, it appears the Obama Administration’s Making Home Affordable foreclosure prevention plan has failed to meet its goal of helping millions of Americans avoid foreclosure.

In fact, according to a recent Treasury Department report, 27 percent of the 650,000 homeowners taking part in the mortgage modification program are now delinquent on their mortgage payments.  Reflecting the mortgage industry’s aversion to permanently modify mortgages, of that number, only 1,711 participating homeowners attempting to avoid foreclosure have been able to convert their modifications to permanent status. Homeowners facing foreclosure and needing help to secure a loan modification were encouraged to visit http://www.makinghomeaffordable.gov.

Crunching these paltry numbers translates into even more disturbing results for many seeking good news about federal mortgage relief and a way to save their homes.  According to Shahien Nasiripour’s recent report in The Huffington Post, results of the President’s $75 billion foreclosure program mean that, for example, out of every 100 homeowners who came to JPMorgan Chase for modification assistance under Making Home Affordable, just 15 have or will likely receive a permanent payment reduction. So, what happened to the other 85? Nasiripour says:

“for every 100 trial plans initiated from April through September 2009 under the Home Affordable Modification Program:

• 29 borrowers did not make all required payments under their trial plan;
• 20 borrowers did not submit all documents required for underwriting;
• 31 borrowers submitted all required documents but the documents did not meet HAMP underwriting standards, due to such things as missing signatures or nonstandard formats;
• 4 borrowers were or are likely to be rejected for undisclosed reasons;
• 1 borrower will not or is not likely to get their payment lowered.”

This Huff Post data comes from the prepared remarks bank officials planned to make before the House Financial Services Committee. The testimony was posted on the committee’s website.

To date, critics say the response of legislators and the Treasury Department to this dire news has been sorely inadequate. While several weeks ago mortgage lenders were threatened with losing access to precious incentives if they didn’t increase permanent mortgage modifications, with millions of homeowners facing foreclosure, failing banks still received billions in bailout money with no real implications for not helping the same struggling borrowers, and by extension communities, avoid the negative impact of foreclosure.  While the Treasury Department has recently extended the modification program, this system on its own appears to have provided few long-term solutions to this continuing housing crisis.

To help homeowners avoid foreclosure in the long-term, industry insiders and other commentators insist legislators will need to force banks to modify mortgages in ways that are affordable over the long-term. Since many the rising numbers of unemployed homeowners are unable to pay their mortgage even with unemployment insurance benefits, one suggested change would be to allow unemployed homeowners a mortgage deferment while they’re looking for work.

Homeowners who are having difficulty making their mortgages may be considering filing for Chapter 7 or 13 bankruptcy protection. Another option for legislators is giving the bankruptcy courts the power to modify these same underwater mortgages during Chapter 7 and Chapter 13 bankruptcy.

As American homeowners languish waiting for more immediate mortgage help, many are turning to bankruptcy to stop foreclosure and other creditor actions. For reliable bankruptcy advice that you can trust, contact The Law Firm of John T. Orcutt. And to find out more about your bankruptcy options, visit The Law Offices of John T. Orcutt’s “Things to See and Hear” information.

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Published Sunday, December 20, 2009 @ 6:52 am

Thus far in the Preventing Foreclosure series, you’ve received an introductory look at how to hold on to your home; learned the best ways to work with your mortgage lender; and were provided with a more permanent plan to keep your house through Chapter 13 bankruptcy.

But Chapter 13 isn’t the only option for average Americans struggling with mortgage debt and facing foreclosure. With Part IV of this six-part series, it’s time to get a better understanding of how filing for Chapter 7 bankruptcy can also help protect yourself and prepare you for a stronger financial future.

Part IV – Chapter 7 Bankruptcy

Stop Foreclosure
As is the case with Chapter 13 bankruptcy, the Bankruptcy Code’s automatic stay is a powerful court order that kicks in as soon as you file your bankruptcy papers. In addition to pausing any foreclosure proceedings, the automatic stay will put a stop to all forms of collection by creditors, including, repossessions, garnishment, lawsuits, and harassing phone calls. If you’ve made the decision that you simply can’t afford your mortgage payment, consider a pre-foreclosure Chapter 7. Your unsecured debt will get wiped out, and the bankruptcy will stall the foreclosure, giving you some time to save up some money for your next step.

Protect All of Your Property
Chapter 7 bankruptcy is, in some ways, win-win situation for homeowners facing foreclosure. Chapter 7 dispenses all of your unsecured debts, including credit cards and health care bills. While creditors, in turn, are entitled to proceeds from a sale of some of your valuable assets, in almost every personal Chapter 7 bankruptcy case there is no property sales of any kind. Thanks to Chapter 7 bankruptcy exemptions, most or all of your property is probably fully protected from sale or repossession, including your home and possibly your cars. With the recent passage of new homestead exemption legislation in North Carolina, chances are, all of your property is protected.
Keep in mind, if you own more than one home, vacation properties or a more expensive home (with a value above your state’s maximum amount) you may want to protect these properties by filing Chapter 13 bankruptcy instead—a better option to protect a home for families with more regular or disposable income.

Dispense With Other Homeowner Debts
Chapter 7 bankruptcy may not only cancel all mortgage debt, but also dispenses with additional mortgages and home equity loans. In addition to removing mortgage debt, new tax laws mean you may no longer face tax liability for defaulting on a mortgage or home-improvement loan.

Avoid Dead-End Solutions and Foreclosure Scams
Amid an uncertain economic period full of rising unemployment, high debt loads, plunging housing values and wobbly stock prices, Chapter 7 bankruptcy provides safe and legal solutions to your foreclosure fears and avoids today’s endless array of rescue scams preying on the vulnerability of desperate homeowners.

Sometimes its Better to Just Walk Away
As 2009 comes to an end, more than 3 million foreclosures are predicted, as homeowners are increasingly incapable of paying the mortgage during this brutal recession. Filing for Chapter 7 bankruptcy pending foreclosure can provide a much-needed stopping point for those drowning in homeowner debt—as well as debts related to credit cards, medical bills, and more—and a comparable starting point for a family’s more viable financial future. The lending industry has taken advantage of consumers, driving home prices to unrealistic heights. With home prices collapsing, and many homeowners owing more than their home is worth, it makes better financial sense to walk away. Chapter 7 allows you to do so with a clean slate.

To get the big picture on how Chapter 7 works and how the laws in North Carolina can help you, speak with a professional bankruptcy lawyer at the The Law Offices of John T. Orcutt.

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Published Friday, December 18, 2009 @ 7:21 pm

Last Friday, the House of Representatives passed a wide-reaching swath of financial reforms, designed to reign in the worse excesses of the banking industry. Democratic lawmakers are hailing the bill as a huge victory for consumers. However, one important provision failed to pass: cramdown.

‘Cramdown’ would allow bankruptcy judges to reduce the principle balance of the mortgage on a primary residence in a Chapter 13 bankruptcy, resulting in lower monthly payments for the filer. It’s important to note that bankruptcy judges are already allowed to practice cramdown for a variety of debt, including boats, cars, vacation homes and family farms. In fact, prior to changes in the bankruptcy laws in 1978, they were able to cramdown residential mortgages as well.

Support for cramdown began gaining strength last spring, when the drop in housing prices caused a rise in foreclosures and a spike of people ‘under water’ in their homes. As the recession got worse, more people became vulnerable. Many Democratic lawmakers argued that cramdown was a necessary provision that would allow more people to stay in their homes. The banking industry countered that it would raise costs for everyone and divert capital from the mortgage market at a time when it desperately needed more, not less funds. Observers pointed out that banker’s fears were unrealistic; banks already eat the loss in a foreclosure, so how would this law upset the whole system?

Meanwhile, the Obama industry introduced housing reforms, notably the Making Houses Affordable, a program designed to encourage mortgage companies to voluntarily modify loans and keep people in their homes. While the program does offer some financial incentives, industry observers note that mortgage companies make far more money from the fees involved when a homeowner goes foreclosure.

In April, the House passed cramdown, but it stalled – badly – in the Senate. Twelve Democrats joined with every Republican to defeat it.

This fall, nearly everyone agrees that the MHA program has been a failure. Far fewer loans have been modified than the administration hoped; foreclosure rates continue to rise across the country. It’s hard not to see the lack of cramdown as a pertinent factor. Cramdown would offer the homeowner some leverage. If mortgage companies refused to modify loans, the homeowner could have filed bankruptcy and the decision to modify or not would have rested with an independent party, the judge. As it is, judges are unable to modify the loans, which leaves the entire decision in the hands of the mortgage company.

That’s why Democrats in the House included cramdown again, in the package of regulatory reforms they voted on last Friday. However, this time – under some pressure from small banks and credit unions – the measure failed to pass even the House.

What’s the future for cramdown? It doesn’t look good. Without some radical change somewhere, it doesn’t look like cramdown will even come up for a vote again. This is too bad; this provision would not only be very helpful to many individual homeowners, it has the potential to send ripples through the housing market as well.

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Published Sunday, December 13, 2009 @ 6:54 pm

In Part I of the Preventing Foreclosure series, you received an introductory look at how to keep your home, with Part II of this six-part series emphasizing the power of being proactive, providing even more specifics on the best ways to prevent impending foreclosure proceedings by working directly with your mortgage lender before you find yourself falling behind.

If you are already behind on your mortgage payments, it’s hard to negotiate with your lender. With so many Americans behind on their mortgages, loan servicing companies simply don’t have the manpower to address every delinquent mortgage. But you have options- Chapter 13 or Chapter 7 bankruptcy proceedings can force creditors to end their collection activities and delay a foreclosure sale.

Part III – Chapter 13 Bankruptcy

When examining your options for saving your home, if you find you are in arrears, but also have regular income to catch up with those back payments, just not all at one time, you may find that Chapter 13 bankruptcy is your best first step in protecting your biggest asset. As such, filing a Chapter 13 bankruptcy stops foreclosure on your home and restructures your debt into a more manageable payment plan— allowing homeowners to pay back what they owe on their mortgage over time, often at a percentage of the cost.

Good Way to Pay With the Automatic Stay

Under the Bankruptcy Code, a debtor in Chapter 13 bankruptcy is protected by the automatic stay. This stay stops creditors in their tracks and prevents their collection actions, including foreclosures. This stay continues working throughout the duration of your bankruptcy case, as long as you adhere to the guidelines set by the court; meaning as long as you remain current on your payments to your bankruptcy trustee, you should come out of the bankruptcy current on your mortgage and with your home.