Published Thursday, December 10, 2009 @ 8:37 am

In Part I of the Preventing Foreclosure series, you received an introductory look at how to stay in your home, either through bankruptcy proceedings or via negotiations with your mortgage lender. In Part II of this six-part series, we’ll elaborate on the ins and out of working with your mortgage lender, including timelines, terms, and what to say when starting this important dialogue.

Part II – Working With Your Lender

The best time to contact your lender is when you’re current on your mortgage and haven’t missed any payments, but you recognize tough financial times are ahead and that this may change in the near future.  Now, more than ever, lenders are willing to negotiate with home loan borrowers, if only to reduce the number of foreclosures they’re currently dealing with. In some cases, lenders are even acknowledging the “borrower blues,” and reaching out to at-risk clients themselves.

For example, Bank of America almost presumes a payment problem with their Home Loan Help website page asking borrowers to choose the statement (and undesirable situation) that most closely describes their own:

• I am current on my mortgage, or I just missed my first payment.
• I think I will have trouble making my mortgage payments soon.
• I have missed more than one mortgage payment.
• I have received a foreclosure notice.
• I want to know more about the federal government’s Making Home Affordable program.

Do it sooner rather than later.

As a result, take advantage of this trend by contacting your lender as soon as your recognize a problem. The sooner you call, the sooner you’ll be able to work out a solution with your lender. Keep in mind, if you’ve already missed several monthly payments, it may be too late, and the lender may move ahead with a foreclosure.

Possible solutions.

Your lender may accept a late payment, partial payments for a several months (though you may have to agree to make up the difference later), or agree to redo the terms of your loan.

What to say when you contact your lender.

Here’s what you should ask for in lender-language. (And by the way, you’ll probably need to get to the right department first — it may have a name like “loss mitigation.”)

Forbearance.

With a forbearance, you make a reduced payment, or no payment, for an agreed-upon period. In most cases, the lender will require you to make up the difference at a later time and is therefore more likely to agree to this option if you can show that you have a bonus, tax refund, or some other extra money coming your way.

Loan reinstatement.

Your lender may agree to allow you to make up your missed (or reduced) payments once your loan is reinstated on a specific date.

Mortgage modification.

Your lender could agree to alter the terms of the loan so that you can better afford the payments. For example, the lender may agree to add your missed payments to your loan balance, to stretch out your loan over a longer term (which will lower your payments but result in more interest over the life of the loan), or to convert an adjustable rate to a fixed rate mortgage.

Keep in mind, however, lenders have so far shown a reluctance to permanently modify your loan. You may have heard of the government’s “Making Homes Affordable” program. The idea behind the program was good in principle. However, the bill gave far too much leeway to lenders. If anything can be learned from the economic crisis that led to the current recession, it’s that if you give bankers too much wiggle room, they will exploit homeowners. And that is exactly what is happening.

As of 9/1/2009, 362,348 homeowners have been approved for “trial” modifications. Of that number, only 1,711 have been turned into permanent modifications. Why would a lender want to put a homeowner in an indefinite trial modification? Because as long as you’re continuing to pay the lower amount, they get a stream of payment. Whats more, the servicer continues to collect servicer fees, which are often elevated for trial modifications. The end result is that your loan is not getting paid down, your house is losing equity, but the banks and their servicers are making out like bandits. For more information on the mortgage modification scam, visit: http://www.billsbills.com/mortgage_modifications.php

For more details on how to conduct negotiations regarding your pending foreclosure or how bankruptcy might be an option, contact The Law Offices of John T. Orcutt.

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Published Wednesday, December 9, 2009 @ 11:28 am

Of all the special programs and incentives in place to help struggling Americans during what many have now deemed “The Great Recession,” perhaps the most critical is the often debated but not often publicly discussed “mortgage cram-down” bill.

First introduced last year but shot down in the Senate in favor of the President’s “Making Home Affordable” loan modificationprogram, the cram-down provision would grant bankruptcy judges special authority over the terms of a mortgage during the bankruptcy process. Based on a filer’s situation, the judge could lengthen the payment term, reduce the interest rate or decrease the balance. The judge will have the right to alter the mortgage even in the face of lender rejection.

Given the number of bankruptcies happening today, it is easy to understand why the lending industry lobby has become increasingly active this week, as the legislation will be inserted into a larger, more sweeping economic regulatory plan being put to the House this week.

The cram-down bill has been championed by many Democratic party leaders, namely House Financial Services Committee Chairman Barney Frank. This version of the cram-down bill, which is identical to the previous bill offered in March of this year, is being presented as an amendment by House Judiciary Committee Chairman John Conyers.

Currently, federal judges have some say over mortgages that become part of the bankruptcy picture. Investment properties and vacation homes can have their mortgages altered by a judge.

What makes the cram-down legislation additionally interesting is that at one time judges were able to alter mortgage terms. Guess what changed that measure? You guessed it. The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act.

Defeating the re-institution of this court power will be a major win for the lending industry. They presented a letter to House leaders stating that the cram-down bill would increase foreclosures and bankruptcies because homeowners would envision an easier path to escaping a burdensome mortgage and further destabilize the house market.

In essence, mortgage lenders are offering no stronger an argument than credit card companies do when trying to fight any sort of rule that may allow a consumer some sort of leeway in repaying overdue balances. In this economy, it comes across as quite brash for lenders to accuse consumers of trying to avoid responsibility. Truthfully, homeowners are the ones shouldering the load for the lending industry’s egregious mis-steps.

In its current state, the cram-down proposal would first require borrowers to attempt a loan modification plan, either through their lender or with the help of a third party. This would enable the judge to make a more qualified decision about the sincerity of the homeowner’s efforts and to determine if the plan they sought was qualified under the Making Home Affordable program.

Lenders would be encouraged to voluntarily decrease a borrower’s monthly payment to 31 percent of a borrower’s paycheck, a standard that before the “boom times” was considered the benchmark for approval. Another component includes the provision that a borrower who is able to have a mortgage “crammed down” would have to reimburse the lender in question for a portion of the expenses incurred from the process if the house is sold before the five-year bankruptcy repayment plan is competed.

Things are different now than they were in March. This time, the cram down bill might fit.

If your lender simply won’t work with you, or you’re stuck in an indefinite “trial mod”, call your Congressman today and insist on judicial modification of mortgages. Go to https://writerep.house.gov/writerep/welcome.shtml for your Congressman’s contact information. The mortgage banking industry has been pulling the strings for far too long. It’s time to take the power back.

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Published Monday, December 7, 2009 @ 7:41 pm

While mortgage companies continue to refuse lower payments to borrowers who can no longer afford their loans, millions are facing delinquency, foreclosure and the loss of their homes. But just because you’re facing tough odds doesn’t mean that you can’t plan ahead to minimize the possibility of foreclosure or mitigate the damage if you find yourself moving toward it. Homeowners just like you can take immediate action, armed with the tools necessary to make the best financial decisions for your future.

In this six-part series we’ll explore how you might stay in your home, the ins and outs of working with your mortgage lender, the pros and cons of a short sale, and various bankruptcy options and alternatives pending foreclosure.

Part I – How to Stay In Your Home

Don’t give up on your home without considering your options. Foreclosure can leave you homeless, hurt your credit rating and make it difficult, if not impossible, to buy another house anytime soon. Your best options if you’re having trouble making mortgage payments include:

Negotiating with your lender
When attempting to stay in your home by working with your lender, it’s important to act quickly. As soon as you realize you’re having trouble paying your home loan, and before you’ve missed any payments, contact your mortgage lender. Now, more than ever, lenders are willing to negotiate with their clients, if only to reduce the record numbers of foreclosures they’re dealing with during this lingering recession.

Filing for bankruptcy
What about if you’re already behind on your mortgage payments? Filing for bankruptcy may help you keep your home, or at least get you out from under looming mortgage debt. With a few exceptions, Chapter 13 or Chapter 7 bankruptcy proceedings force creditors to end their collection activities and delay impending foreclosure sales. Each of these bankruptcy options will be explored in part three and four of this series.

When you file for bankruptcy, the foreclosure process is legally stopped (called an “automatic stay”). Foreclosure proceedings cannot be reinstated until your bankruptcy case closes or the lender gets permission by the court to proceed, thereby “lifting the stay” on the foreclosure process. So, if your plan is to stay in your home payment-free, for as long as possible, bankruptcy can delay the foreclosure auction, and your ultimate move-out date, saving you time (and money) to figure out your next move.

Other options include:

Selling your home yourself
If you simply can’t afford the home you own, you still have power to take control of your financial destiny. If your home has appreciated in value since you bought it, you may be able to sell it yourself. Again, contact your lender, who may let you stop making payments, and stay in your home, until the house is sold. If the proceeds from the sale don’t cover your mortgage and related costs, you might be in a short sale situation. A short sale can be a good option in certain circumstances, but in most cases, it’s best to simply surrender your home in a bankruptcy. The short sale option will be discussed a length later in the series.

Giving your deed to the lender
What happens if no one buys your house? Don’t lose hope. Your lender may agree to a “deed in lieu of foreclosure,” taking on the deed and canceling your debt. Like a foreclosure, the bank can then sell your home. A deed in lieu, like a short sale, is unlikely to erase your personal liability. In this regard, bankruptcy is usually a better option.

For more detailed information on how to stay put in your home pending foreclosure or bankruptcy contact The Law Offices of John T. Orcutt.

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Published Wednesday, December 2, 2009 @ 2:52 pm

Have you avoided filing bankruptcy because you’re afraid you’ll lose your home, your automobile, your personal property? You don’t have to be afraid! Bankruptcy laws protect you from becoming homeless, without a car, household goods, your jewelry, or the tools you need to do your job.

When you file a Chapter 7 bankruptcy you are allowed to protect—or, exempt—some or all of your property from being taken away from you. In fact, in lots of cases, bankruptcy exemptions allow you to keep everything you own!

If you’ve lived in North Carolina for at least two years, you can exempt up to $35,000 of the value of your home. What this means is that if you have a home worth $200,000 with a mortgage balance of $165,000, the $18,500 of equity you have in your home is protected! As long as you can keep up with your mortgage payments you can keep your home. Even if you have more than $35,000.00 in equity, you can still protect your property by paying out the value of the non-exempt equity over the course of a Chapter 13 plan. This allows you to discharge your debts AND keep your home.

Similarly, if there is no equity in your car, you will not lose your car! Are you “upside down” on your car loan? Well, as long as you keep making your car payments, you will not lose your car!

But what if you have more than $3,500 equity in your car? What if you have a car worth $4000 that you own outright? Again, in a Chapter 13, you can pay out the difference–$500 in this case—and keep your car!

What else is exempt? Your bankruptcy attorney will help you find all the exemptions you’re entitled to, but here are some of the things you get to keep in a bankruptcy:

• Your furniture, clothes, appliances, books, and other household goods up to a total value of $5,000 for you and an additional $1,000 for each of your dependents. (Up to $4000 total for your dependents.)
• Your other property, up to a total value of $3,500.
• Your professional books and the tools you use for your work or trade, up to $2,000 in total value.
• Your life insurance plan
• Your wheelchair, other mobility aids, your hearing aid, and any other medical equipment prescribed by your doctor
• Your IRA or Roth account
• Your burial plots

What’s not exempt? Anything you’ve purchased in the 90 days before filing bankruptcy. Keep this in mind as you prepare for your bankruptcy filing. We want you keep what you own! Call the Law Offices of John T. Orcutt at 1-800-899-1414 or visit www.billsbills.com.

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Published Wednesday, November 25, 2009 @ 12:12 pm

Should you try to modify your mortgage before filing for bankruptcy? Bankruptcy will stop foreclosure proceedings; a Chapter 13 bankruptcy will allow you to keep your home, and to develop a payment plan to meet your back payment obligations. But it won’t necessarily lower your monthly mortgage payments. Is it worth it to try to modify your mortgage and secure lower payments first?

The evidence is mounting that it’s probably not worth your effort. A recent report shows that although 362,348 loans have been approved for “trial” modifications, only 1,711 of those trial modifications have been made permanent. Assuming you can even get over the first hurdle of being approved for a trial modification, you’re likely to get stuck in “trial mod limbo”. Depending on your lender’s mood on any given day, you could at any point be dropped from your trial modification, worse off than where you started.

But isn’t the program backed by the government It’s true, the government had high hopes for the Making Home Affordable program, designed to help homeowners who are having trouble making their payments. However, mortgage companies have dragged their feet over it; they make more money off fees when a house goes into foreclosure than they do modifying a mortgage. The government may well say you qualify for MHA, and your lender simply refuses to go along.

Faced with a recalcitrant lender, you might turn to foreclosure consultants. While there are legitimate consultants, be wary of scams. Many consultants will simply charge you a fee and never even bother to contact your lender!

You also have to consider whether or not changing the terms of your loan is in your best interest. For example, you may be qualified to refinance under the Hope for Homeowners program (H4H). However, H4H requires upfront fees and additional mortgage insurance; later, when you sell or refinance your house, you will be required to share between 50 and 100 % of the proceeds with the government.

Some lenders might agree to roll your loan into a 40-year fixed mortgage. In this case, you’d pay less per month, but for a much longer period of time. Depending on your loan amount, the additional money could be tens or even hundreds of thousands of dollars. Plus, of course, you will have payments for an extra 10 years, and less equity in the home if you sell before that. Will the difference in monthly payments make that additional debt worth it? It depends on your circumstances, of course, but possibly not. Remember, once you file for Chapter 13, much or all of your unsecured debt may be erased, freeing up more of your income for your mortgage payment.

The earlier you file for Chapter 13 bankruptcy, the more likely you are to save your home. If foreclosure proceedings have advanced enough prior to your filing, you may not be able to afford the Chapter 13 payment that is required to catch you up. If you’re starting to get behind, call a bankruptcy attorney today.

While modification is still receiving a lot of hype in the press, it’s becoming clear that it’s all just hype. . The best way to sort through these options is with the help of a professional bankruptcy attorney. It doesn’t make sense to spend weeks trying to modify your loan, only to find out it resulted in filing for bankruptcy too late.

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Published Monday, November 23, 2009 @ 6:49 pm

The Associated Press is reporting that the foreclosure crisis will persist well into next year as high unemployment “pushes more people out of homes, pulls down housing prices and raises concerns about the broader economic recovery.”

The latest evidence comes this week in a report from the Mortgage Bankers Association identifying that a rising tide of fixed-rate home loans made to people with good credit are now facing foreclosure, marking a surprising shift from assumptions that only riskier subprime loans are driving the current housing crisis. The report also stated that 14 percent of homeowners with a mortgage were either late on payments or in foreclosure at the end of September 2009, marking another record-high for the ninth straight quarter.

These findings speak to an even more beleaguered housing market than previously thought, bearing the weight of even more home-loan defaults. The main culprit, industry experts say, is rising unemployment, forcing even the most responsible homeowners to fall behind on their mortgages.

As the AP found, many laid-off homeowners might be able to survive on their savings for a while, but “the longer the economic situation stays in place, the less likely they are to hold on,” said Jay Brinkmann, chief economist at the Mortgage Bankers Association.

As Robert L. Borosage, Co-Director of the Campaign for America’s Future, blogged this week, “[o]ne in six workers is unemployed, has given up looking or is forced to work part-time. For young workers aged 16 to 24, unemployment is 19%. For young African Americans, unemployment is at 30%. And as Federal Reserve Chair Ben Bernanke testified yesterday, we’re likely to see — at best — a slow recovery with no new job growth. That exacts a devastating toll in hopes crushed, families stressed, young people stalled, and poverty and hunger spreading.And even if we avoid another downturn, the job picture will get worse. Crippling state deficits — over $260 billion over 2 years — will force layoffs that cost an estimated 900,000 jobs next year if nothing is done.”

As a direct result of this explosion of job losses, this year, more than 3 million foreclosures are predicted, as homeowners are increasingly incapable of paying the mortgage during a brutal recession. As the financial meltdown continues and unemployment surges, the millions that have now slipped into delinquency and foreclosure with only one conceivable way out: bankruptcy.

Homeowners with prime and sub-prime mortgages alike are taking immediate action, arming themselves with basic bankruptcy tools. So, if you’re interested in staying in your home, looking for permanent solutions to foreclosure threats, and ready to quit spending and start saving, there’s never been a better time to consult with a bankruptcy expert. For more information regarding homeowner benefits of bankruptcy filing, visit The Law Offices of John T. Orcutt’s “Things to See and Hear” information.

While recent reports of the nation’s financial future are nothing short of bleak, the good news remains that through bankruptcy laws, homeowners facing foreclosure can take their future into their own hands, stop drowning in mortgage debt, and begin on the road to a more viable financial future.

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Published Monday, October 26, 2009 @ 10:38 pm

In discussing the issues surrounding the current economy, the term “mortgage meltdown” is now officially as tired a wordplay as assemblages like “From Wall Street to Main Street,” “Where’s my bailout?” and “It’s a crisis of confidence.” Beyond these catchphrases, you might still be wondering: What is really behind this recession?

In a nutshell, big banks created a huge demand for mortgage backed securities. Mortgage securities are basically your mortgage, packaged with a bunch of other people’s mortgages, which are then sold on the open market to investment banks who pay for the package based on the quality of loans included. Good borrowers with good loan applications made up the “Prime” packages, and different variations of the packages existed for other qualities of debt, such as “Alt-A” and “Sub-Prime”, the latter being defined by weak credit scores and little documentation. The packaging allowed investors to pick and choose, depending on how much risk they wanted to take on. This worked well as long as everyone in the game stayed honest.

It turns out, everyone involved was not being honest. As more and more consumers qualified for loans, the securities became watered down. It got to the point that literally anyone with a pulse was being qualified for a home loan. The prime packages were increasingly including “low-doc” and “no-doc” consumers, who had little prospect of being able to afford their mortgages over the long term. However, the investment banks kept buying and selling, re-packaging bad loans for investment banks who were hungry for more securities.

This giant tinder box eventually exploded when all parties realized that what they owned was worth far less than they thought. Adding to the devastation was the trillions of dollars in side bets on the market, termed “credit default swaps”. When the whole thing blew up, everyone needed to be paid. The only problem- the banks simply didn’t have enough money to go around. Lending froze as everyone clung tightly to the dollars that remained. Despite hundreds of billions in government money, banks still aren’t completely out of the woods.

Now that the dust has somewhat settled, many entities who purchased the bad debt are discovering that they can’t even prove ownership. In a New York bankruptcy court earlier this month, a mortgage servicer was unable to prove it serviced the loan or that the parent bank was the legal note holder. Upon formal request to prove their ownership of the note, the servicer, PHH Mortgage alerted the court that US Bank actually owned the loan. The only “proof” which PHH could provide was some vague paperwork by PHH officials, multiple signatures by the same executive (although with different titles each time), documents post-dated from the date of bankruptcy filing and eventually, an admittance of improper fees levied and even less proof they had a right to what was owed. The judge, unable to ascertain whether the debtor’s proposed Chapter 13 plan would be paying the right bank, completely disallowed the bank’s claim. You heard that right–the judge completely eliminated well over $450,000 in mortgage debt! Not only will this person continue to sleep in her house, she’ll be doing so knowing her mortgage payment isn’t due any time soon. Or ever.

Not every case involving a confused lender will result in such a favorable outcome. A lot will depend on the supporting documentation behind the loan, but if you bought or refinanced a home during the boom years, the chances are higher that your note holder might not be able to prove that it owns the debt. In a bankruptcy setting, this is a huge problem for the lender, and a potential windfall for the consumer.

The recent New York case is being looked at as a serious wake-up call for lending institutions: the days of free passes and assembly-line foreclosures are over. If you’re a consumer with a bad loan and bad terms you can’t afford, at the very least a bankruptcy may be an option to catch you up on the missed mortgage payments. Call an experienced bankruptcy attorney today to discuss how bankruptcy can help you save your family home. In North Carolina, call the Law Offices of John T. Orcutt. 1-800-899-1414.

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Published Saturday, September 26, 2009 @ 6:17 pm

One of the greatest benefits of filing for bankruptcy protection is that it allows struggling homeowners a second chance to catch up on missed mortgage payments. For many people, the fear of losing a beloved family home is one of the most stressful parts of their struggle with debt. But is your house really worth saving?

If you find yourself living in an “upside down house,”  it may be worthwhile to consider simply letting the house go. “Upside down” refers to a property where you owe more money than the house is worth. Back when the housing  market was still booming, this situation was almost unthinkable, but now that the bubble has burst, short selling―selling a home for less than what is owed―is all too common. Unfortunately, a short sale leads to all kinds of nasty repercussions: Unless your mortgage lender agrees otherwise, you will still be responsible for the difference between the sale price and amount owed. Second, even if your lender agrees to forgive the debt, you’ll still be hit with the tax consequences.

If you’re a homeowner and considering bankruptcy, now is the time to take an objective look at the big financial picture and make some tough choices. Your equity situation is a great place to start this assessment. If you don’t have any equity in the home, holding on to that upside down house can’t even be justified on the basis that home ownership is a good investment. Just a few years ago a house was a sterling investment―but if you’re continuing to sink in negative equity, you don’t own a good investment, just a bunch of debt. And if you are living in an upside down house, how bad is your situation? In other words, how much more money do you owe the bank than the house is worth? If the difference is only a few thousand dollars, it may be OK to hold on to the house if you can really afford the payments. But if the difference is huge, you may want to consider the idea of surrendering the property in bankruptcy.

Second, take a look at your budget. Why did you get behind on your payments? Were you always struggling to make the payments, always one emergency away from getting behind? If getting rid of your credit card debt doesn’t free up enough money to comfortably make the mortgage payment, bankruptcy won’t help you save the home in the long term. If, on the other hand, you got behind because of a temporary drop in income that has since rebounded, bankruptcy can get you back on track with your mortgage and put your in a better financial position by dumping your unsecured debt.

The costs associated with home ownership go beyond the monthly mortgage payments. Can you afford property taxes? Your homeowner’s insurance? Does the house require a lot of maintenance? What are your utility payments like? These are all good questions to consider as you assess whether it makes sense to hold on to your home. Another thing to keep in mind is the structure of the loan. If you were one of the many unfortunate borrowers who signed on to an adjustable rate or interest only loan, your loan terms will never allow you to get ahead.

The good news is that the depressed housing market means that a lot of places that can’t sell are being offered for rent. Renting can be a good solution for someone seeking to rebuild their financial health, especially in the short term. If you are trying to keep your kids at the same school or are reluctant to leave the comforts of a familiar neighborhood, you may be able to find a good rental in the same area as your house.

Make sure to ask your bankruptcy attorney for advice on this issue. Letting a foreclosure proceed unchecked is not a good way of dealing with the situation. If the property sells for less than the outstanding loan balance, you will still owe the difference.. Surrendering the home in bankruptcy shields you by eliminating any personal liability after the foreclosure sale. If you are facing foreclosure now, contact a bankruptcy attorney immediately to ensure that you remain in control. Your attorney can help you assess your financial outlook rationally and help you make the right decision.

From: The Law Offices of John T. Orcutt. We always offer a free initial one on one consultation. Call today to set up your appointment. If you are in North Carolina, call 1-800-899-1414, or visit www.billsbills.com to fill out our free and confidential debt questionnaire.

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Published Wednesday, September 23, 2009 @ 10:41 pm

Say you find yourself struggling with a mountain of debt. Your paycheck seems to be spent before you even get it, as soon as you pay a bill another one arrives, and you’re starting to wonder how much longer you can deal with the stress of unmanageable debt. To make matters worse, you fall behind on your housing payment and your bank threatens you with foreclosure.

So when your phone rings and a professional sounding individual on the other end promises to stop your foreclosure or even modify your mortgage, you see it as a godsend! After all, the government has been promising to help Americans hold on to their homes. A foreclosure assistance agency may even be part of a government effort to help people just like you. As a matter of fact, nothing the “foreclosure assistance agency” says leads you to believe otherwise. Should you take the leap?

Unfortunately, as all too many have learned the hard way, there are no miracle cures when you have serious debt problems. With so many people struggling to hold on to their homes, it comes as little surprise that scammers are taking advantage of vulnerable homeowners at the worst possible time.

So how do these schemes work? In most of these scams, a company will call a homeowner and offer help in stopping a foreclosure. Some companies are little more than a call center, with no attorneys, accountants or loan specialists employed.. The companies demand a fee upfront, sometimes as much as $3000.00. Desperate homeowners will pay the fee, only to discover–often when it is too late–that the company did nothing at all to help them.  Because of this all too common model, one measure the FTC is considering is a ban on up-front fees for mortgage assistance.

Since April, the government has promised to crack down on “foreclosure assistance” outfits posing as government agencies. Now, a recent meeting of the multi-agency taskforce created by the Obama administration to address the problem of mortgage fraud updated the public on the government’s efforts.The FTC brought civil charges against two companies this week that were running foreclosure assistance scams. This brings the number of such cases this year to 22.

One of the worst aspects of this situation is that many of the companies work to create the impression in homeowners that they represent a government agency. The two companies charged this week were doing precisely that, and the government is working hard to crack down on these wrongdoers in particular. It’s your responsibility as an informed consumer to protect yourself. If you are being asked to pay a hefty upfront fee, it’s a good sign that the modification program is a scam. And remember, bankruptcy is always an option if you are behind on your mortgage. A Chapter 13 bankruptcy will catch up your missed payments over a 5 year plan, and eliminate your unsecured debts. Contact a bankruptcy attorney today to find out more. In North Carolina, contact the Law Offices of John T. Orcutt at 1-800-899-1414. Or visit www.billsbills.com to complete our confidential debt questionnaire.

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Published Monday, September 21, 2009 @ 1:49 pm

Many of us now come into marriage with some debts in tow. Some of us also arrive owning some of our own property. Once married, we incur new debts, jointly or separately; for example, one spouse may finance a car under his name, while both spouses may need to list their income together when they borrow for a new home. In addition, you may have credit cards and checking accounts in your own name, and some held jointly.  Sometimes one spouse will have the legal responsibility for credit card debt, but the other spouse, as an authorized user of the account, has the ability to add to it. A spouse may not have the responsibility for a debt, but may contribute to payment from her income. And then there are the difference in state law, which also adds layers: in the nine community property states, both partners own all property equally, while in the non-community property states (or “equitable distribution” states, such as North Carolina), each spouse owns all of his own property and one half of the property held jointly.

As you can see, marriage can definitely complicate matters when it comes to property and debt! For many couples facing an unmanageable amount of debt together, these different factors may complicate the decision to file for bankruptcy However, there’s no need for alarm. If your marriage is suffering from the pressures of debt, bankruptcy can offer the relief to allow your family to focus on the things that really matter. An experienced bankruptcy attorney will be able to assess your situation and advice you on the best strategy for taking care of your debts while saving your property. Based on the kinds of debt and property your couple has, he will be able to help you choose whether to file separately or jointly. And in some situations, he may advise one partner to file and the other partner not to. Let’s look at some of the factors he’ll weigh in making his determination:

If you file together, all of your separately held debts, as well as all of the jointly held debts acquired during the marriage will be discharged. Filing together is also cheaper than filing two separate bankruptcies, and often times the financial troubles of one spouse are tied to those of the other. If only one spouse files, jointly held debts will be discharged only for the spouse who files; the other spouse will still be responsible for the debt.

However, if one spouse holds most of the troublesome debt in her own name, it may make sense for her to file alone. This is especially true if the non-filing spouse has better credit. Preserving one party’s credit can help the filing spouse recover from bankruptcy faster. The non-filing spouse can co-sign on future accounts, allowing the filing spouse a better chance to rebuild post-bankruptcy.

Don’t let these nuances deter you from the most important point: no matter what kind of debt you have and what kind of property you hold, bankruptcy can offer a life-changing opportunity for you and your spouse to put unmanageable debt behind you. Because you want to approach your filing strategically, it’s an excellent idea to contact an experienced bankruptcy attorney to help you and your spouse make the right choice.

In North Carolina, contact the Law Offices of John T. Orcutt at 1-800-899-1414, or visit www.billsbills.com to complete our free and confidential debt questionnaire.

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Published Thursday, September 3, 2009 @ 9:43 am

The economy is so grim right now it’s hard to see the silver lining, but the good news about markets is that they rarely stand still forever. Even now, economists are slowly and cautiously becoming more optimistic about the situation, and consumers are gradually gaining back confidence. The housing market, for example, posted a quarterly rise in prices for the first time in three years, which may indicate a stirring of recovery. Still, there are a lot of homes out there not worth half what they were recently, and new construction has ground to a halt for the time being. Is there a silver lining in this one for you?

Well, there may be if you are not a homeowner and not looking to become one immediately. With so many properties sitting empty while the market waits for buyers to return, people who are not homeowners can enjoy a renter’s market. Suddenly there are many options for housing–nicer places at must lower prices. In some areas of the country, it is actually cheaper to rent than to buy at the moment.

If you are considering or already preparing to file for bankruptcy protection, you may be worried about your ability to rent a home, since so many landlord applications now require a credit check and/or ask about past bankruptcies. Don’t let such questions dissuade you from pursuing a rental you really like. Because this is a renter’s market, landlords may soften some of these requirements. Most landlords will be more concerned with your payment history with past landlords than whatever happened with your credit cards. If you have a good history with someone, ask him if you can use his name for a reference and offer to provide it for the new landlord when you apply. Other times you may be able to bargain with the landlord by offering to pay a slightly larger security deposit or providing other assurances of payment. Remember that as much as you need a place to live, landlords need tenants to make money from their real estate investments―or in this market, just to minimize losses!

Home ownership has some real advantages, and many people feel that it’s a waste of money to pay rent that will never translate to equity. However, home ownership comes with its own host of troubles, and renting can be a good solution, even if just in the short term. Home ownership is a big step, and you may want to allow yourself some breathing room (and an opportunity to rebuild your credit) before taking the plunge. If so, you might as well take advantage of a renter’s market!

If you already own a home, but are having trouble with the monthly payments, bankruptcy is a great option to get caught up on the missed payments. Unfortunately, some people wait until it’s too late to take advantage of these protections, and by the time they accept that bankruptcy is their best option, it may be too late for bankruptcy to help. That’s why it’s important to contact a bankruptcy attorney early in the process, before your finances are beyond repair. If you have conceded that it not financially feasible to keep your home, bankruptcy acts as a shelter from the after effects of a foreclosure, such as tax liability and deficiency judgments. Further, if foreclosure is imminent, a bankruptcy will stop the foreclosure from proceeding, even if you intend to surrender the property in the foreclosure. This strategy can buy your family some time to transition to a new living arrangement.

These are strange days for homeowners and those considering home ownership. If you have doubts about your future financial viability, it may be best to wait out the recession before plunging into the real estate market. If your income is already stretched to the max by debt payments, consider speaking with a bankruptcy attorney. A properly planned bankruptcy can put you in the best possible position to rebuild your damaged credit and pursue home ownership in the future.

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Published Saturday, August 29, 2009 @ 4:56 pm

Several months ago, in the heart of the recession with no recognizable signs of clotting in America’s collective financial blood loss, the government passed on a bill to allow millions of shaky mortgages to be subject to struggling homeowners’ bankruptcy petitions. Known as the Cramdown Bill, it would have given bankruptcy judges the right to modify, or “cramdown” mortgage terms, such as interest rates and principal balances, as part of the approval of a personal bankruptcy plan. The banking lobby launched a heavy campaign to defeat the cramdown provision, leaving families with limited options to save their homes.

Said Dick Durbin (D-Ill), “After two years of efforts that rely on banks to volunteer to rework mortgages, it is time to admit that the programs that have been put in place thus far to ease the crisis are clearly not working. With a simple change to the bankruptcy code … over 1.8 million families could save their homes in this country between now and the end of 2012, if the Senate could only muster the courage to help them.”

President Obama’s effort, the Making Home Affordable Program, while sound in nature but seriously flawed in execution, calls for a nationwide cooperative effort on the part of banks and the government to jointly reduce the pain of spiking adjustable mortgages through a system of application programs and financial incentives for lending institutions. Problems have arisen in the plan’s adoption because of its lack of marketing, cumbersome paperwork, and a lack of education about its benefits amongst those charged with carrying it out.

Those in 1600 Pennsylvania Avenue stated adamantly that their idea would help up to 4 million families. Yet, only 325,000 mortgages have been subject to approval under the plan and only 160,000 of those modifications are in a three-month trial period to test the families’ ability to afford the new monthly payments.

In the face of the White House’s plan, the number of mortgage modifications are drastically behind the rate at which foreclosures are being filed, a rate which is steadily increasing. Regardless of the evidence of increasing home sales and other signs of recovery, unemployment will remain a serious detriment to our economy’s well being for the foreseeable future. Now, a few congressional leaders believe that integrating cramdown measures into the nation’s recovery effort can replace a number of broken rungs on the ladder out of the economic basement.

Unfortunately, Durbin and a select few Democrats are a minority voice in the din of legislative tirades about universal health care and a slew of other polarizing, societal digressions. More pointedly, Obama has all put stamped out any lingering embers of the cramdown bill that threatened to flare up again.

Sadly, this is not a partisan issue that might be alleviated by some sort of closed-door agreement. Both The White House and Republicans are united against cramdown strategies, citing pressure from the lending industry. In response to Senator Durbin renewed call for reform, lobbying groups such as the Mortgage Bankers Association continue to insist that judicial modification is the wrong path. Meanwhile, President Obama’s mortgage recovery team is blitzing the lending industry with letters of encouragement from all angles in order to cement the plan’s success.

Let’s hope Durbin and his band of Cramdown comrades can kick up enough dust when riding through congressional committee meetings and Beltway saloons to make the rescue of the American mortgage a success. If not, we may all be on economic lock down for another few years.

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Published Friday, August 21, 2009 @ 10:04 am

It’s official: Making Home Affordable isn’t owning up to its namesake.

After months of simmering frustration with the federal program designed to financially encourage lenders to be more cooperative with economically-challenged mortgage holders, it seems that the national media has finally created an outlet for the hundreds of thousands of Americans trying to sort it all out.

The success of a program like Making Home Affordable, and the general willingness of banks to assist consumers in adjusting their mortgages, is so critical because recent reports have indicated that avoiding foreclosure is one of the primary reasons people file bankruptcy. In most cases, a Chapter 13 will allow a person to stay in their home by catching up on missed mortgage payments.

Unfortunately, the disconnect between banks and the federal government is proving too vast to properly serve the folks who need mortgage modification the most. With unemployment still high and more people purging retirement funds to stay afloat, a well-executed mortgage adjustment could provide a beacon of hope. However, the tales of consumer woe in regard to sorting through the phone trees, paperwork, subsections, addenda and misinformed customer service agents are becoming more evident everyday.

An article on MSNBC.com brought to light the trials of a California couple working with Wells Fargo to adjust their mortgage after moving to North Carolina. After several run-arounds about missing and out-of-date forms, their application was eventually rejected partly because, according to the bank, they spend too much money on food.

Try as the government might to deny it, the Making Home Affordable program and the related entanglements twisting within the operations of cooperating banks is nothing more than a perfect example of a bureaucracy trying to do too much too fast. The race to help was started before the route was planned and the participants have found themselves well off track. For every one person helped there a hundred fighting a system designed to make their lives better.

We want to see people get the help they need. That being said, an unfortunate byproduct of the delays and setbacks is that people are waiting longer to make the most beneficial financial decisions. If a mortgage could be modified within a reasonable timeframe, the money saved could be put toward other debts. Once the process is started, applicants begin to base their hope for financial reprieve on the approval of their mortgage modification. When they realize months later that it may not happen, it’s already too late.

One of the scariest reports predicts that by 2011, close to 50% of all homeowners in the United States will owe more on their home than the market says its worth. Other reports show that over 13 percent of mortgage holders are behind on payments or in foreclosure.

Foreclosures are the proverbial boat anchor to an economy trying to shake itself loose from the muck. Their burden is just too much to allow any sort of meaningful recovery and now it looks like the primary federal program designed to pull us free is only dragging us deeper.

If there was ever a time for one last push to initiate the “cramdown bill,” it’s now. If you are behind on your mortgage, speak to a bankruptcy attorney early. Chapter 13 bankruptcy is the only sure way to force your lender to accept a repayment plan. Call today. In North Carolina, call the Law Offices of John T. Orcutt at 1-800-899-1414.

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Published Sunday, August 16, 2009 @ 6:41 pm

Fear of foreclosure is certainly pushing many families into bankruptcy. Although there are now many programs, both at the state and federal level, to help homeowners avoid foreclosure, if your lender is unwilling to work with you, bankruptcy may be the only way you can stay in your home.

Unfortunately, if you don’t choose to seek help through a bankruptcy attorney or your lender, there are plenty of criminal actors out there that would be more than happy to assist in escaping your financial woes.

With the rise in bankruptcies and foreclosures across America, thieves are growing more bold in their effort to take whatever belongings, and dignity, from those facing the most challenging of economic circumstances. Perhaps the most rampant perpetrators are fraudulent mortgage modification companies, who take thousands upfront from unsuspecting homeowners, only to disappear into thin air. Don’t ever agree to an upfront fee for a mortgage modification, and don’t ever agree to make your mortgage payments to a third party who promises to forward your payments directly to your lender. If you are working with a legitimate mortgage modification company, stay involved in the process. It’s important to maintain constant contact with your mortgage lender and your loan modification company.

Bogus loan mod companies aren’t the only criminals taking advantage of desperate homeowners. Grifters are moving into what appears to be a more legitimate method of theft: buying houses.

Targeting those in high-foreclosure zip codes, representatives from shell companies are offering to buy houses from those in dire straights. They sell the fear of foreclosure and bankruptcy and offer to make them a clean, easy deal and a quick sale. Heck, they even hand people money for the house. Real money! So it can’t be a scam, right?

First off, they only give you a very small amount of money, regardless of the equity in the home or its market value. Since you’re desperate, it’s a fair number, right? The plan calls for the company to buy the home and rent it, allowing you to move on with your life. However, the rent payments they collect never make it to the mortgage company. In fact, the sale never gets recorded, there’s no legal closing and you are still responsible for the mortgage. By the time it’s all sorted out, they’ve collected months of rent, from most likely planted tenants, and moved on. The hand-written signs on freeway exits and the local Craigslist’s posts that offer to buy and close fast are nine times out of ten the mark of illegal activity.

State regulators believe that there are close to 50 “fast home buy” operations currently working in North Carolina, some of which are perfectly legal with solid reputations. But those companies are easy to recognize. They have sound records with the Better Business Bureau, prominent advertising and established offices. Keep in mind though, in the majority of cases, a fast sale is a bad idea and a short sale even worse. A short sale requires your lender to accept less than the outstanding loan amount. Many times the lender won’t really forgive the deficiency, requiring you to sign a promissory note covering the difference. The tax implications of a short sale can be substantial as well. Any time a creditor agrees to accept less than what is owed, they will report the deficiency as taxable income to the IRS. Not only did you lose your home, but now you owe taxes.

Don’t fall prey to a foreclosure rescue scam just because you were afraid to consider bankruptcy. If you’re facing a foreclosure and your lender is not working with you, a bankruptcy attorney is your best ally. Bankruptcy can keep your family in your home, and if you truly can’t afford the home, surrendering it in a bankruptcy shields you from any remaining personal liability on the loan. Don’t wait another day to call. In North Carolina, contact the Law Offices of John T. Orcutt for a free consultation. 1-800-899-1414.

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Published Thursday, August 6, 2009 @ 1:21 pm

The month of July 2009 saw yet another increase in the number of consumer bankruptcies filed in the U.S., as low employment and high consumer debt continues to be a toxic combination throughout most of the country with only little signs that an antidote can be found. The number of filings, 126,434, was a 34.3 percent increase from the same month in 2009 and 8.7 percent increase from June, 2009.

Most experts agree that the rapidly decreasing number of jobs is in direct correlation with the consistent increases in bankruptcies every month. Also contributing to the increase is the so-far ineffective Home Affordable Modification Program. According to a recent report released by the Treasury Department, the modification program has only benefited 9% of eligible homeowners. When loan modification efforts fail, many homeowners turn to Chapter 13 bankruptcy, which can immediately stop a foreclosure and allows the homeowner the opportunity to catch up on missed payments over a 5 year plan.

In each of the last three months, more than 20 percent of those who have filed cited they did so to avoid foreclosure. The data was compiled by the Consumer Credit Counseling Service of Greater Atlanta. The organization, a nonprofit credit counseling service, collected data from individuals from April to June and determined that counseling was not going to be enough to assist them in preventing foreclosure.

Even with banks being pressured by federal government (and the national court of public opinion) to work with mortgage holders, the majority of home owners are frightened by the chance they could lose the roof over their heads. This alarming trend also demonstrates, once again, that the White House is not doing nearly enough to promote or educate America on its Making Home Affordable program, which provides financial incentives for banks and mortgage lenders to alleviate the rate at which they foreclose on homes.

The report is also further evidence that a Bankruptcy Cramdown Bill is more critical than ever. A proposed legislative action that has recently shown renewed signs of life, the bill would allow bankruptcy judges to alter, or cramdown, a homeowner’s mortgage in conjunction with their approved bankruptcy plan.

As we discussed on the blog previously, Senator Dick Durbin from Illinois is fighting to keep the bill breathing, going so far as to recently issue many in the lending industry a three-month ultimatum to do more in stemming the tide of foreclosures or see renewed vigor in Congress to revive cramdown legislature. Financial Services Committee Chairman Barney Frank from Massachusetts, a lightening rod for all things controversial in government, is also pushing hard to bring the bill back to life.

Oddly enough, the cramdown battle is being waged between powerful Senate Democrats and President Obama. Meanwhile, Americans’ home loans flap helplessly in the wind of the recession.

If you are behind on your mortgage, bankruptcy can help you stay in your home. In North Carolina, contact the Law Offices of John T. Orcutt for a free initial debt consultation. 1-800-899-1414.

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Published Tuesday, August 4, 2009 @ 6:20 am

Sometimes life throws you the unexpected. If you’re living paycheck to paycheck, all it takes is one unanticipated expense to put you on the path to a truly disastrous financial scenario. It’s often the unforeseen emergency expense which starts the ball rolling. Soon you’re 2 or 3 months behind on the car payment, and repossession of your car or foreclosure becomes a very real possibility. That’s why it’s so important to talk to a bankruptcy attorney the moment things start to get out of control.

But even if your debt problems have sneaked up on you and now you’re facing an imminent repossession, a quick bankruptcy filing can put the brakes on the repo man. If your situation is critical, you can file what’s called a bare-bones or skeletal filing with a court to prevent imminent action against you; for example, if your vehicle is being repossessed or you are facing foreclosure, the court will allow you to file an emergency bankruptcy petition.

In a bare-bones filing, the court allows you to file your bankruptcy petition with only a minimum of the required set of documents. After this minimal filing, you will be given a set amount of time to gather the remaining documents. The amount of time can differ, but generally you will have up to 15 days to complete your petition. Once your petition is filed, you enjoy the benefit of the automatic stay, which stops creditors’ collection efforts in their tracks. This allows you to keep the car, stay in your home, and put the creditors back in their place.

The emergency petition should be filed only if absolutely necessary. If you can avoid doing so, it’s probably a good idea to give yourself and your attorney time to carefully file your case. This approach allows you to develop the best bankruptcy plan to help you out of your financial trap and into a fresh start. If you’re facing foreclosure, for example, you will have ample time to contact an attorney before the foreclosure sale. In these cases, don’t wait until the last minute! Car repossessions, on the other hand, can develop much more quickly and often necessitate quick action to prevent irreversible consequences.

If an emergency situation has caused you to get behind on your car or home, talk to an attorney early. An experienced bankruptcy attorney knows how the repossession process works and can best advise you on how to best protect your interests. Don’t wait another second, call today.

Durham bankruptcy. Raleigh bankruptcy. Fayetteville bankruptcy. Wilson bankruptcy.

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Published Wednesday, July 8, 2009 @ 11:11 am

So you’ve had a few mishaps lately in your financial life– like just about everybody else in America. And you’ve been working really hard to keep up the juggling act: spread the minimum amount of money around to the maximum number of creditors to appease them until you finally get a break. But that pesky mortgage payment is mucking up your system. It’s so much larger than the rest of your bills, and, therefore, so much easier to fall behind on. The merciless late fees aren’t helping the matter. Before you know it, you find you’re four months behind and the prospect of ever catching up with the missed payments seems like a pipe dream.

It has become obvious that the juggling act just isn’t working anymore. The pressure by your mortgage company is mounting, and the severity of the situation hits you like a ton of bricks: you will lose your home if you don’t do something.

Since it is a secured debt, a mortgage comes with the risk that the lender will foreclose and actually have you and your family removed from the home. Few people ever imagine this could happen on the happy closing day when they signed that phone-book-sized stack of papers. But now, more than ever, many Americans are learning a lot more about foreclosure than they ever wanted to know.

In general, there are two types of foreclosure: ‘judicial’ and ‘nonjudicial’ foreclosure. A judicial foreclosure begins when the lender files a lawsuit against you. A nonjudicial foreclosure only requires the lender to file documents with the county clerk or another local official and mail copies to you.

After all of the requisite paperwork and notices are filed, a public auction, also known as a ‘foreclosure sale” is held and members of the public have the opportunity to bid on the foreclosed property. Once the sale is complete, the successful bidder can evict the borrower from the premises.

If you are at the precipice of foreclosure and the idea of standing at the curb with your personal belongings strewn around you is not a scenario you ever wish to find yourself in, you may want to look into filing a Chapter 13 bankruptcy. The Bankruptcy Code recognizes the importance of home ownership and the need to protect what is usually a family’s largest and most important asset.

Chapter 13 can help you catch up on back mortgage payments. Immediately after a Chapter 13 filing, the mortgage lender will be stayed (prevented) from foreclosing during the bankruptcy procedure. You may live in the home as the details are worked out and a plan is put in place for you to repay the arrears on your mortgage. The repayment plan includes past due principal and interest, and penalty fees, and usually lasts for a period of five years. The bankruptcy trustee may be able to challenge excessive fees and penalties imposed by lenders. This will put you in a better position to get current on your mortgage and keep your house.

During this time, you must also make the normal mortgage payments that are due, but remember, that Chapter 13 will increase your ability to pay by discharging some or all of your unsecured debt. It is often the unsecured debt– the medical bills, the credit card debt—that was at the root of the homeowner’s failure to keep current on the mortgage payments in the first place.

It is essential to contact a lawyer as soon as possible after foreclosure procedures are threatened. If you do not file a Chapter 13 before the foreclosure sale is imminent, you may also be tagged with additional fees for the foreclosure proceedings on top of everything else. Remember, Chapter 13 will not eliminate your responsibility to pay your lender what you owe under your mortgage contract, but it will give you breathing room to stave off foreclosure and save your home.

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Published Monday, July 6, 2009 @ 11:47 am

Are you hopelessly behind on your mortgage payments and wondering what to do about it? People in your shoes typically do one of three things: (1) try to convince the bank to just take whatever the property can fetch on the market (a “short sale”); (2) just let the bank foreclose; or (3) file bankruptcy.

Many people see filing bankruptcy as the “last-resort” of these alternatives. This is a mistake. Being seriously delinquent on your mortgage carries significant, long term risks that run far deeper than just losing your home. In many cases, filing bankruptcy will actually be the best and most efficient way to manage these risks and get past this difficult episode in your life.

Consider this: if you try to convince the bank to take a short sale or if you simply wait for it to foreclose on the property, you’ll likely have to wait months and months for anything to happen. These days, banks are just sitting on their duffs when it comes to the delinquent mortgages on their books. They’re swamped with past-due accounts and have little incentive to act since they’re just going to take a loss at the end of the day. While the bank sits around doing nothing, you’ll continue to be stuck in a frustrating financial limbo. As the months drag on, the delinquent payments, late fees, and compounded interest will keep growing – along with your sense of desperation – and your credit rating will sink further and further down the tubes.

What’s more, if you go the foreclosure route, the bank may be able to sue you for the remaining balance on the loan after the foreclosure sale. And, even if the bank cancels the debt, the saga may still continue. Canceled debt is normally treated as “income.” While the federal government has amended the federal tax laws to allow people to exclude such debts from their income through 2010, many states have not followed suit. If you live in one of those states, you’ll likely have to pay income tax on the amount of the canceled debt. The same situation applies in the context of a short sale – the debt the bank cancels after the sale is considered taxable income.

Now let’s consider what filing bankruptcy can do for you. If you file under Chapter 13, you could actually save your home. Your missed payments will be spread out over a 5 year repayment period. As long as you continue making your plan payments, the lender can not proceed with foreclosure. And, if you owe more on the home than it’s worth, you may be able wipe out those burdensome second or third loans that make the property “upside down.” While a Chapter 7 bankruptcy can’t stop a foreclosure, the automatic “stay” against collection activity will at least temporarily remove the threat of foreclosure, giving you more time to work out an alternative.

Even more, whether you file under Chapter 7 or Chapter 13, you’ll address all of your outstanding debts – not just your delinquent mortgage. Chances are, you’re dealing with other unmanageable debts – like credit card debt that you’ve been forced to rack up in your efforts to pay the unaffordable mortgage. Bankruptcy can wipe out these debts – for good. It will also protect you against liability for any deficiency on the loan, as well as tax liability for any canceled debt. And, as soon as your case is over, you can start over with a clean slate.

So if you’re dealing with a seriously delinquent mortgage, don’t just wait around hoping the bank will do something. Act now, and take control of the situation. Call a bankruptcy attorney and learn how the bankruptcy laws can help you resolve all of your unmanageable debts. The sooner you file, the sooner you can start rebuilding your credit, and your life.

In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

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Published Friday, June 26, 2009 @ 9:02 am

The sad fact is, these days nobody is immune to financial troubles. This includes people who have worked hard their entire lives, all the while looking forward to reaping the rewards of their hard work in a restful, stress-free retirement. So what happens to seniors when they run into serious financial trouble? The reality is that wherever there are people in trouble, unsavory parties are out there looking to cash in.  With nowhere else to turn to,  many cash-strapped seniors have become the focus for companies looking to hook clients into signing what are called “reverse mortgages.” It’s true that these arrangements can help some people, and some legitimate lenders do help seniors come to mutually beneficial arrangements.  But because this is regrettably not true across the board, it’s important to understand what a reverse mortgage is and the possible risks, before signing up.

A reverse mortgage allows a borrower to receive a loan secured by equity they own in their home. The loan doesn’t have to be repaid until the borrower moves from the home or dies. In order to qualify for a reverse mortgage, a borrower must generally be at least 62 years old. Essentially, these folks are encouraged to cash in the equity they’ve built up in their homes through long years of payments. A reverse mortgage allows a senior to borrow up to some set amount equal to a percentage of the home’s value that is owned free and clear by the borrower. She then receives regular portions of that amount, without having to make any payments on the loan for the time being.

This sounds like a great deal for some folks, and in fact it may well be for a few. However, nobody should rush into signing a reverse mortgage without considering all other options carefully. It’s true that no payments will be made on the loan for the time being, but the loan will have to be repaid eventually. Once the borrower dies, his heirs may be due for a nasty surprise when the lender on a reverse mortgage shows up to collect on the loan. In addition, it’s easy for borrowers to be taken in by unscrupulous lenders who do not adequately explain costs, fees and other liabilities associated with the mortgage. Also, the funds received from a reverse mortgage can affect benefits a senior is normally entitled to, such as Social Security or Medicaid.

Be sure to work with legitimate lenders. Make sure you avoid predatory lenders who target older folks and their home equity; some of these unscrupulous companies even try to trick seniors with tactics like modeling mailings to look like official government agency correspondence. Make sure you are very clear on all fees and terms before signing anything. For more information on this topic, consult the American Association of Retired People. They have excellent information about these “seductive” loan offers on their website: http://www.aarp.org/money/personal/reverse_mortgages/.

If you are struggling because of medical bills or credit card debt, it may make more sense for you to declare bankruptcy. Before you put your house on the line, it’s imperative to consult with a bankruptcy attorney in order to explore whether this option will offer you a better solution. Remember that declaring bankruptcy will often allow you to keep your home, and you may end up much better off having done so. A reverse mortgage could force you to give up some of the protections afforded by the bankruptcy code should you be forced to declare down the line.

Serving North Carolina residents, John T. Orcutt has helped thousands of seniors get real relief from debt. Call today to set up your free initial consultation. 1-800-899-1414.

Raleigh bankruptcy attorney. Durham bankruptcy attorney. Fayetteville bankruptcy attorney. Wilson bankruptcy attorney.

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Published Wednesday, June 17, 2009 @ 12:39 pm

No doubt about it: Times are tough.  You, like so many others, may be looking to grab onto any life-line you’ve got. For many of us, the only major investment we have is our home, so it’s not only a natural place to start, it might look like the only tool in the arsenal. Refinancing a mortgage can serve to staunch the flow in a pinch, or at least, put a band-aid on it; a home equity loan can seem like a downright life-saver when times are tough on your wallet. If you’re feeling a little panicky, it’s a good idea to take a deep breath and have a reality check. Before jumping out of the frying pan, take a look around and make sure you’re not jumping into the fire.

Refinancing seems like a great idea because ostensibly you’re not changing anything about your home ownership situation except for your interest rates. But keep in mind two factors: First, unless interest rates have gone down two full percentage points, you probably won’t save much more than what will get eaten up by closing costs and other fees. Second, make sure you keep an eye on the new terms, particularly if they involve a variable interest rate. These can save you some money early on, but will hit you hard in later years; remember that when it comes to long term investments like your home, the big picture often matters more than immediate relief.

And speaking of immediate relief, many of us are encouraged to solve one instant-gratification problem, namely, credit card bills, by taking on another, in the form of a home equity loan. Before you jump on one of these loans, put the situation into perspective. A home equity loan doesn’t reduce the amount you owe, and it can have some serious repercussions. Lenders urging you to borrow against the equity you’ve built up in your home will point out that unlike credit card debt, home mortgage interest is tax deductible. Lenders will tell you that converting credit card debt by taking out a home equity loan will result in a single, convenient payment, probably lower than what you’re paying on your credit cards, with a lower interest rate. These things might be true, but will they really spell out a long term solution? Home equity loans may have lower interest rates than some credit cards, but these rates are nowhere near those of conventional mortgages. Will the payments really be easier to handle? If you can’t keep up with your credit card payments now, it’s unlikely that you’ll have an easier time making the one BIG payment each month for the home equity loan. What’s more, you will probably end up incurring loan fees and other costs, especially if you end up having to pay fees like pre-payment penalties on your current mortgage or broker’s fees.

Even scarier, if you pay back all your credit cards but end up having to declare bankruptcy anyway, a home equity loan means you’ve converted unsecured debt into secured debt; that means you now have a lien on your property that won’t go away through bankruptcy. Are you really ready to give up the protection bankruptcy can afford you down the line? Make no mistake, home equity loans are all too often more trouble than they’re worth.  Before taking on one of these loans, consult a bankruptcy lawyer. Bankruptcy, unlike home equity loans, can be a true life-line.

From: The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

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Published Saturday, June 13, 2009 @ 10:32 am

We have put a lot on the blog about how your home can be affected by bankruptcy. Hopefully, you’ve read through some of those posts. If not, simply do a search to find as much as you can about the topic because knowing how bankruptcy affects where you lay your head down at night can be very helpful to you and your family.

To continue on the topic, let’s talk about the Homestead Exemption. It can be a little confusing and this post will touch on the general aspects of it and the specifics can (and should) be left for your face-to-face meeting with one of our attorneys.

Homestead exemption laws are in place to shield your house from creditors who do not have a lien on it. In other words, your credit card company can’t come after it. The amount of value placed on your home is based on its equity. If the market says your home is worth $200,000 and you owe $180,000 on the mortgage, your equity is $20,000. Pretty simple math.

Different states have different numbers for the amount of the exemption. So, if you are in a state where the exemption is $20,000 or more, your only concern is the mortgage holder. Thus, one of the best questions you can put on your list when you meet with your bankruptcy attorney for the first time is: “What is the state’s homestead exemption?” In North Carolina, it’s $18,500 per owner. (But that is not all you need to know about it; so still ask the question!)

In most states, the amount of the exemption is limited. Some states in the South and Midwest, however, have unlimited homestead exemptions, including Texas, Florida, Iowa and South Dakota. However, even in those states, if you acquired your home within 1,215 days of bankruptcy, you are limited to protections of only $125,000.

Here’s another confusing aspect of the homestead exemption laws: some states allow you to choose either their state’s exemptions or the federal government’s exemptions under the Bankruptcy Code. North Carolina does not, however. You are subject to the state’s rules. Also, you need to have been a resident of your state for at least two years to claim the exemption in your current state. However, if you have not lived in your state for two years, you are subject to the exemption rules of the state in which you lived 180 days prior to filing.

As some people have done, never try to leverage the homestead exemption by quickly buying down your mortgage in order to create more equity. The amount of the exemption can actually be reduced by whatever amount of equity a person tries to create intentionally as a way to hamper creditors ability to collect from you. So, let’s say things were starting to get bad for you and the creditors have found your phone number. You decide that a bunch of cash you have from a recent windfall will be better spent buying into your mortgage instead of paying off the delinquent boat loan. If you then file for bankruptcy within a few weeks, your homestead exemption will be reduced by that amount.

The homestead exemption is one of the more challenging bankruptcy concepts to grasp at first, which again, is why you should make sure to ask your bankruptcy attorney about how it will affect you. In the end, it’s all about protecting your home. While you may have made some spending errors along the way, they are certainly not worth losing your home.

Live in North Carolina and need to find out what your rights are. Contact the bankruptcty attorneys at the Law Offices of John T. Orcutt, experienced attorneys offering a totally free and confidential consultation and serving 28 counties in N.C. (See list at www.billsbills.com/offices.php. To make an appointment for a free consultation, during normal business hours, call toll free 1-800–899-1414, or make an “online” appointment by visiting our website at www.billsbills.com.

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Published Tuesday, June 9, 2009 @ 11:10 am

As you are probably well aware, bankruptcy is an important decision that should not be taken lightly. If you are eligible to file but hesitate to do so, you stand to lose more than you may guess. Dithering too long can ruin the strategic advantage of timing; deciding not to file at all could cause you to lose everything.

Take for example your car: if your car is securing a debt and you decide not to file for bankruptcy, a creditor may proceed with repossessing your vehicle. You may think you’re ready to lose your car should it come down to repossession, but consider this: the proceeds from the sale of the car undoubtedly will not cover the entire secured debt. This means you’ve lost your car―and you still owe the difference between the auction sale price and outstanding loan! Bankruptcy allows you to control the situation, by allowing you to safely surrender the vehicle without risking a costly deficiency claim after the car is sold. If you want to keep the car, Chapter 13 allows you to catch up with missed payments, putting you in a better position to keep the car while eliminating the risk of a deficiency claim if you decide later that you can’t afford the payments.

If you stand to lose your home, the steps a mortgage company can take won’t be as dramatic as waking up one day and finding your car gone. Sure, a foreclosure takes more time, usually at least three months. Still, the possibility of keeping your home is one of the excellent benefits of filing for bankruptcy protection. A solid Chapter 13 plan can catch up your missed payments and stop a foreclosing lender in its tracks.

The sitting duck strategy is pretty terrible for most every kind of debt. There are some debts that a bankruptcy won’t discharge, so you may think that declaring bankruptcy won’t help you anyway, so why bother. But letting a bad situation spin out of control while you take no action is a recipe for disaster. Take student loans for example, Congress has abolished the statute of limitation for student loans, so you can’t just wait those out. If you are delinquent long enough on your student loans, the government could garnish your wages without even going to court. By eliminating other dischargeable debt in your bankruptcy, you can be back on track to start repaying your non-dischargeable student loans.

If you owe money for support obligations, your state may have a program to revoke professional licenses, or worse, a divorce court could even send you to jail. You’ll also end up in the slammer if you were ordered to pay money as a result of a criminal proceedings. So now you may be thinking, these all sound pretty scary, but a bankruptcy won’t discharge them, so what’s the point? Remember that declaring bankruptcy can help you discharge some kinds of debts, freeing money up to pay those not eligible for discharge. This is a heck of a lot better than waiting around for the worst to arrive. If you are in trouble, don’t wait: call a bankruptcy attorney and get to work.

With offices in Raleigh, Durham, Wilson and Fayetteville, the Law Offices of John T. Orcutt can help you get a handle on your debt. Call today to set up your free initial consultation: 1-800-899-1414.

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Published Wednesday, June 3, 2009 @ 12:15 pm

Our blog sure does cover a lot of ground about bankruptcy. Which is a good thing. We want to be sure that you understand all the processes, terms, principles and philosophies that factor into such an important decision. We even throw in some recent news about bankruptcy to help provide additional “real world” perspective on how bankruptcy laws are interpreted and applied.

All that being said, it’s always good to get back to the basics. So let’s talk about some common mistakes people make when considering or starting the bankruptcy process:

• Borrowing money from family to pay creditors: This will only make things worse. Even if your venture capitalist brother is more than willing to lend a dollar, don’t do it. Every dollar that comes from a family member will gain more emotional interest in the coming years than the debt relief was worth. There is no sense in spreading financial stress and discomfort when its not necessary. The problem is compounded if you repay the relative prior to filing bankruptcy. A bankruptcy trustee can sue friends or relatives who have received more than $600 in repayment during the year prior to your bankruptcy. Regardless of your family’s outlook on your financial situation, see your own way through it.
• Hiding assets: This sounds like a simple enough rule to follow, doesn’t it? You may be surprised at how many people try to transfer ownership on prized items that they know will look pretty attractive to the trustee overseeing your case. This is about not making things worse. Oh, and its about looking good in court. The last thing you want is a bankruptcy judge under the impression you tried to pull one over on him or her. Always be upfront and honest about what you own.
• “Selectively” listing your creditors: Be very thorough when providing contact information and names of creditors to whom you owe money. Take the time to get it right from the beginning. Your bankruptcy attorney can certainly help but some folks have decided that maybe one or two groups called a few too many times or may have been a bit harsh in their collection efforts that just maybe, you can sneak one past them. You can’t. Again, don’t hide anything; get it all out as soon as possible.
• Cashing in retirement accounts: This is never a good idea, whether you are filing bankruptcy or not. No expense is worth putting off the rest of your life. Remember, your bankruptcy dealings will pass well before it’s time for most people to retire. More likely than not, any retirement funds are fully protected because of acts passed in 1974 and 2005, as discussed in a previous post. Plus, the tax penalties will prevent you from being able to use all of the money.
• Use your home equity line: Once more for the people in the back row: You can’t borrow your way out of debt. Do not put your home in trouble when its not necessary. If you have managed to keep that equity line in check while building other kinds of debt, let it be. That money is better used for home-related expenses and tax benefits when you are on solid financial ground.

To recap, keep browsing the blog for all things bankruptcy and keep the above points in mind so if you do decide to file bankruptcy, you can get off on the right foot.

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Published Tuesday, June 2, 2009 @ 4:28 pm

Scam artists sure are brave. Well, there are probably more accurate ways to describe those who deliberately take aim at people in dire financial straits. They just are not fit to be published.

Turns out the Federal Trade Commission has spotted a series of deceptive Internet advertisements that claimed to lead browsers to the “official” Web site of the recently introduced Making Home Affordable program, a national effort that provides free mortgage loan assistance and encourages banks and lenders to help homeowners stay afloat. The actual official Web address is http://www.makinghomeaffordable.gov/

The FTC promptly filed a court order to halt the misleading ads that were popping up on some of the most popular search engines, such as yahoo.com, msn.com and altavista.com.

Many people facing bankruptcy today are dealing with unreasonable mortgage loans as a result of aggressive and poorly vetted loan programs.

The ads took advantage of Web searches for mortgage assistance and the federal program. The ads would lead to a site that offered loan modification programs for a fee. Previous posts on the blog have mentioned the government program, which is worthwhile in principle but is facing some communication hurdles. For example, since it is not marketed particularly well, the opportunities for scammers to take advantage are fairly prevalent. There simply hasn’t been enough education about the program. However, many American home owners have benefited from its initiatives.

Those named in the complaint are accused of using “sponsored links,” or paid search results, that boldly displayed the official Web site. However, clicking on the ad lead to Web sites of private mortgage assistance programs that charged fees and were in no way associated with the free services available through the government.

But that’s not the end of it.

The misleading approach would be somewhat easier to accept if these Web sites were associated with legitimate loan modification companies simply being too aggressive in their marketing or that didn’t realize to what extent they could affiliate themselves with the Making Home Affordable program. However, it appears that those behind the pixelated solicitations are nothing more than common criminals seeking to swipe identities. The Web sites asked for extensive financial information and, wait for it … social security numbers! Not only that, some of the sites boasted that they only refer people needing help to yet another loan modification service, which is simply an effort to take your information and further distance themselves from the crime.

The examples of Web-based fraud and below-the-belt assistance scams are becoming more and more prevalent. In light of the ever growing shadows over exactly who can help and what service is best, people facing financial difficulty are best served by speaking to a reputable attorney that specializes in bankruptcy law and helping people navigate the choppy economic waters caused by storms of mounting debt.

Be careful out there.

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Published Tuesday, May 26, 2009 @ 4:00 pm

Despite the defeat of the mortgage cramdown bill that would have allowed bankruptcy judges more power to renegotiate mortgages on behalf of those seeking relief, the Obama administration is realizing some slow success with its heavily touted foreclosure prevention program.

Mortgages eligible for the program started to be serviced last month and to date, 55,000 home loans have been subjected to modification as a way to alleviate the financial pain caused by sub-prime loan interest rate spikes. Based on the early success, the administration announced that the $75 billion dollar program is being expanded and will offer additional incentives for lenders who participate and to homeowners in need of relief.

The incentives involve the government subsidizing interest rate reductions. The idea is to push the amount of the monthly mortgage payment to less than or equal to 31% of a homeowner’s pre-tax income. Before the rise of sub-prime mortgages and abnormally low interest rates, that percentage was a benchmark for mortgage qualification.

Going forward, the program will encourage short sales in conjunction with loan modification. A short sale occurs when a lender agrees to sell a home for less than what is owed (or for less than market value) to avoid foreclosure. Essentially, the parties arrive at a settlement between what is owed on the mortgage and the price of the property. Many real estate agents have jumped into the short sale market of late and it appears that President Obama’s program will do more to encourage the strategy.

Banks and mortgage service providers have been reaching out to homeowners who may qualify for the loan modification program, which is defined by having a loan of not more than $729,750 that was originated before January 1, 2009 and is currently in default or at risk of default. That risk can be attributed a sudden loss of income or drastic jump in expenses. Given the nation’s current unemployment numbers, the number of homeowners who will be able to qualify should continue to climb.

Even though the program was created to help struggling mortgage holders, there has been widespread reporting of bureaucratic headaches associated with the modification efforts. However, many attribute the delays or poor service to the speed at which the rules and process were put in place. It can be argued though, that timing was critical and that if the administration delayed the program, countless families would have lost their homes. Basically, every day help was not available, the crisis would grow worse. Last month alone, 342,000 homes received a foreclosure filing. As job losses continue to mount, the number of at risk homeowners will continue to increase, putting greater and greater pressure on the program.

A reason for the recent announcement about expansion was to also reassure service providers and those seeking help that changes are being made and that those offering help are being incentivized to be keep things moving smoothly. Given the dire economic situation, there simply is not enough manpower to help everyone immediately. Another possibility is that some servicers may simply be dragging their feet until it is too late for the borrower to get help. However, keep in mind, bankruptcy is always a viable option if modification is simply not working out. A properly planned Chapter 13 bankruptcy will immediately halt a foreclosure and allow you and your family to stay in your home to catch up on your mortgage payments. Contact a bankruptcy attorney today to discuss your options. Serving North Carolina residents, John T. Orcutt’s can help your family in these tough times. Call today to set up a free consultation in 4 convenient locations: Raleigh, Wilson, Fayetteville and Durham.

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Published Sunday, May 24, 2009 @ 6:42 pm

Whether you file bankruptcy under Chapter 7 or Chapter 13, pretty much everything you own at the time you file the petition becomes property of the “bankruptcy estate”. Sounds bad, right? Wrong! Just because property is included in the bankruptcy estate doesn’t mean your creditors can get their hands on it. Many, if not all, of your assets will be considered “exempt,” meaning your creditors can’t touch them. The rest are considered “nonexempt.”

Understanding the difference is very important in both Chapter 7 and Chapter 13 cases. In a Chapter 7 case, nonexempt assets are subject to liquidation; the trustee can take the property, sell it, and distribute the proceeds to your creditors. In a Chapter 13 case, the amount you have to pay your creditors is generally equivalent to the value of your nonexempt assets. In other words, if you have $10,000 in nonexempt assets, you’ll have to pay at least that much over the life of the repayment plan.

So what is considered “exempt”? Well, the Bankruptcy Code sets forth a list of various types of property and assets that debtors can keep. Each state also has its own list of exemptions. Thirty-four states have opted out of the federal exemptions. Debtors in those states must use the state exemptions. The other states allow debtors to choose between the federal and state exemptions. Fortunately, the federal exemptions and those of each state allow you to keep most of the property that you need and value the most.

For most people, the two most important assets are their home and their car. The exemptions for these types of property generally turn on the amount of equity a person has in the property. Equity is the extent to which the value of an asset exceeds what you owe for it. If you don’t have any equity in your home or car, there’s no issue; you get to keep it, end of story. If you do have equity, you can exempt up to a certain amount of that equity. To the extent your equity exceeds that amount, it is considered nonexempt. In a Chapter 7 bankruptcy, this means the trustee could sell the property to recover that equity, or you may have to pay the difference if you want to keep the property. In such cases, Chapter 13 bankruptcy may be the better option for you.

The exemptions avaliable in North Carolina, which has opted out of the federal exemptions, are a good example. North Carolina provides a “homestead exemption,” which allows you to keep up to $18,500 of the equity in your home. You can also exempt up to $3,500 of equity in your car. For household goods (furniture, appliances, clothes, etc.), you get to exempt up to $5,000 in value, plus an additional $1,000 for each dependent you have (up to $4,000). You can exempt up to $2,000 for professional books and tools particular to your trade.

Additional exemptions in North Carolina include: life insurance proceeds; personal injury awards; retirement accounts and annuities; all IRA accunts; public benefits (e.g., social security and unemployment payments); up to $3,500 in professionally-prescribed health aids; all alimony and child support payments; and up to $5,000 toward any other property, to the extent you haven’t used all of your homestead exemption (the “wildcard” exemption).

There is also an unlimited “tenancy by the entirety” exemption to protect any and all real property you have. In North Carolina, real property bought in the name of husband and wife is deemed to be a “tenancy by the entirety”. The only drawback is that this exemption cannot be claimed against creditors where both you and your spouse owe the debt. Where that is not a problem, this exemption can be a lifesaver, to protect your home as well as other real property.

The really good news is that, in North Carolina, every person gets to claim a full set of these exemptions. For example, if you and your spouse decide to file bankruptcy together (called “jointly”), you get a full set of exemptions and so does your spouse. In effect, this doubles the amount of stuff you and your spouse can keep and protect.

Understanding and correctly applying the available exemptions is crucial to ensuring you get the maximum benefit bankruptcy has to offer you. That’s why it is essential to retain an experienced bankruptcy attorney who can walk you through this process. In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson.

P.S. Want to know the “really, really good news”? Most of the time, with proper planning, clients of The Law Offices of John T. Orcutt get to keep everything and lost nothing. That’s right…file bankruptcy…and lose nothing.

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Published Friday, May 1, 2009 @ 9:10 pm

On the eve of success for a very valuable piece of legislation that will instill a new set of guidelines for credit card companies’ communication of interest rate hikes, fees and other monetary stipulations to consumers, a banking bill provision aimed to do similar justice for Americans struggling with mortgage debt and bankruptcy was shot down in the Senate on the last day of April.

The provision was part of a larger and much hyped bankruptcy and housing industry reform bill, the Helping Families Save Their Homes Act, that recently passed the House and was considered another major component of the Obama administration’s effort to help alleviate America’s collective debtload.

Called a “cramdown,” the language would give homeowners facing severe mortgage concerns more flexibility, through bankruptcy judges, to negotiate their payment terms with lenders after filing. Specifically, it would modify a mortgage to reflect a home’s current market value, as opposed to the price it garnered or value gained during the heart of the real estate bubble of the last several years.

However, the measure only received 45 votes in the Senate, helping the lending industry dodge another bureaucratic bullet in the face of so many banking reforms and bailout controversies. In March of this year, the cramdown passed the House rather comfortably at 234 votes to 191.

The proposal itself was a rather quiet train rolling through Capitol Hill engineered by Illinois Senator Dick Durbin, where its increasing momentum was beginning to startle banking and other lending trade organizations and lobbyists, which used the threat of additional “economic meltdown” if the provision was approved. The groups argued that it would simply result in banks charging higher fees to all mortgage holders to mitigate the risk of losing money should a borrower default.

The mortgage relief measure was designed to accommodate homeowners with sub-prime and non-traditional loans and would have only been in place until 2012.

A similar banking bill made its way around the house that did include the mortgage and bankruptcy addendum. However, the action in the Senate had a significant effect on the provision’s lifespan in the House version. In other words, it didn’t stand much of chance. Despite that, the cramdown was considered the heart of the legislation for some of its backers and when eradicated in the Senate, many politicians believed the overall bill lost a good portion of its teeth.

Since this is the United States congress, deliberations were inevitable. On April 29, a negotiated proposal included simply putting restrictions on what mortgages could be cramdowned by judges. It called for only allowing mortgages that were entered into prior to January 1, 2009, that were delinquent for at least 60 days and were not for more than $729,000. The modified version was all for naught, however. In fact, per an agreement in the Senate on April 30, no other cramdown legislation can be entered into the bill.

The rejection of the mortgage cramdown is thought to be representative of a larger statement being made by the business community and many Republicans about the federal government’s ever-increasing involvement in private business. The fact that the measure had traction in March and is now completely absent is a strong testament to the power of the banking lobby, which had additional time to woo Senate leaders.

For now, those looking to rebuild after bankruptcy can take solace in the recent credit card industry reform. For now, the mortgage industry appears in control.

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Published Thursday, April 30, 2009 @ 1:09 pm

If your debt problems are beginning to wear you down, like they are for so many people today, it’s important that you remain aware of the fact that there are people looking to further erode your unstable financial position to better their own. Unfortunately, financial “help” begins to show up in many forms, from payday lenders to credit counselors to phony financial counselors. Even though some of the pitches may sound like a great way out, the odds are that if it sounds to good to be true, it is.

In the same manner that so many banks were handing out home loans in the last few years, with a smile and a pat on the back, mortgage relief scammers are becoming all too common. They are happy to help, and even happier to leave with what’s left of your money. Here are some signs to watch for.

First, understand that there are many legitimate and honest professionals that can help you prevent or manage a foreclosure. Nevertheless, the number of scams is growing and will continue to grow as the recession deepens. The best advice is to use your head. Look for signs of business legitimacy, such as office space, general professionalism and evidence that the company appears “permanent.” In other words, even if they have an office, is it furnished with some cheap tables and only a couple of phones? Or, does it convey a sense of stability, with actual desks, offices and multiple employees? It should be easy to tell if its a fly by night outfit.

No legitimate mortgage counselor will ask you to transfer the deed to the house to someone else’s name. What would be the point of them helping you keep it, right? If a conversation you’re having leads in this direction, walk away. This scenario can sound really plausible, but don’t buy into it. The deed is how local municipalities recognize ownership. If it changes hands, it is immensely difficult to reclaim and you’ll have to move out before you have a chance to argue about it.

Also, don’t let anyone talk you into paying whatever mortgage you can directly to them. That’s a sure sign of criminal behavior. The bank is the only entity to which you should ever send mortgage funds. Other mortgage scams will include reasons why you should not consult an attorney or your lender, persuading you that it’s a waste of money and that their service is all you need. Think for a moment why someone would say that. Again, a little common sense is all you will need to avoid something so blatantly felonious.

The truth is, if you are behind on your mortgage, a Chapter 13 bankruptcy is your best bet for keeping your family’s home. A solid Chapter 13 payment plan will catch you up on your missed payments and stop the foreclosure proceedings immediately. Stop waiting around for your lender to come to the table! Speak to an experienced bankruptcy attorney who can save your home now.

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Published Sunday, April 12, 2009 @ 3:00 am

Are you struggling with debt and considering bankruptcy? It helps to know that you’re not alone. According to the National Bankruptcy Research Center, almost 1.1 million people filed for bankruptcy in 2008. That’s up 33 percent from 2007, when around 800,000 people filed, and even more from the year before, when some 590,000 people sought bankruptcy protection. In fact, during the first 10 months of 2008, an average of more than 4,000 people per day filed cases. And the number of filings is expected to increase even further in 2009. This spike in filings over the last few years is in direct response to the current economic downturn, which has landed on the doorstep of millions of hardworking individuals who had been doing their best to make ends meet.

As the downturn continues to work itself deeper into our economy, more and more people are going to find themselves up against the ropes – fending off demands from credit card companies, trying to save their homes from foreclosure, worrying about having their cars repossessed, etc. If you’re one of these people, it’s time to call a bankruptcy attorney. There’s no shame in seeking such help. Bankruptcy was designed for times such as this, to help people like you. Just look at the number of filings over the last few years: you are not alone – far from it. Millions of people around the country have gotten caught up in this mess, many through no fault of their own.

So why are so many people turning to bankruptcy to get them out of this mess? It’s simple: bankruptcy allows you to take control over your life again and to make a fresh start. If you qualify for it, Chapter 7 bankruptcy can wipe out most or all of your unsecured debts (e.g., credit card debt or medical bills). Chapter 13 bankruptcy can help you reorganize your debts into an affordable repayment plan and can save your home from foreclosure or your car from repossession.

Filing bankruptcy is, of course, a serious thing, and it will have negative consequences for your credit rating. But, chances are, your credit is already on the downward-slide from late or missed payments to your creditors. And, wouldn’t it be nice to save some of that money you keep losing every month to never-ending interest payments? The sooner you can get your debt situation under control – by eliminating debts in Chapter 7 or setting up a repayment plan under Chapter 13 – the sooner you can begin rebuilding your credit again and, even more importantly, your life. Millions of people have gone before you. Call a bankruptcy attorney today and learn what bankruptcy can do for you.

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Published Monday, April 6, 2009 @ 3:47 pm

Are you one of the thousands of people across the country who got caught up in the turmoil of the home mortgage meltdown? Are you afraid of losing your home and wondering what to do? First ask yourself whether you want to save your home or whether you are willing to let it go.  Whichever decision you make, bankruptcy can help you and your family with a fresh start.

If You Want To Save Your Home

If you want to save your home, you have a number of options. You can work directly with your lender to renegotiate the terms of the loan to lower your payments. But remember, while it may be in the lender’s interest to work with you, they are not required to do anything. Furthermore, you’ll have to demonstrate some kind of “financial hardship” first– and it could take months to get a final decision.

Bankruptcy is often a better solution. A Chapter 13 can stop a foreclosure and allow you to repay missed payments through an affordable repayment plan.  You’ll be able to get back on track with your mortgage and get rid of costly credit card debt at the same time.   This will free up your finances, making it less likely that you will get behind in the future.  And if your home is worth less than your first mortgage, bankruptcy can completely wipe out that expensive  second or  third mortgage.   How about that?

If You’re Unable Or Unwilling To Save Your Home

If you’re unable or unwilling to save your home, you might be tempted to simply let the property go into foreclosure. Without further action, this can be a costly mistake. In some states, if the property is sold in foreclosure for less than what you owe on the loan, the lender can come after you for the difference. If the lender does not come after you, it will cancel the remaining debt, and this is treated as “income” for tax purposes. The federal government recently passed legislation allowing individuals to exclude such canceled debt from their income, this protection will end with this tax year. And, even if you can exclude it under federal law, your home state must have similar legislation on the books for you to avoid state income tax liability. To date, many states have not passed such laws.

Bankruptcy can help protect you from these potentially devastating consequences of a foreclosure. It will address all of your outstanding debts, instead of just your home mortgage. It will also protect you from any potential liability for a deficiency on the loan, including tax liability. Finally, because a bankruptcy gets rid of your other debts, you can start rebuilding your credit rating quickly and efficiently.

The moral of the story? Don’t just let your mortgage lender foreclose on your family’s home. Call a bankruptcy attorney first.

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