Posts Tagged ‘Foreclosure’

Missouri Anti-Mediation Foreclosure Bill Gaining Traction

In an update from a previous post, a bill that would prevent local governments from being able to require lenders to offer mediation to homeowners facing foreclosure is nearing passage in the Missouri Senate. The bill, passed by the Missouri House of Representatives a few weeks ago, would directly oppose ordinances passed in St. Louis and St. Louis County over the past few months. If the Senate passes the bill, it would soon make the St. Louis ordinances null and void.

                A Senate committee approved House Bill 446 last week after a review. The bill now awaits an official vote by the entire Senate. Basically, the bill would prevent local governments in Missouri from adding requirements to agreements between lenders and borrowers in real estate transactions. This preventative measure directly opposes the St. Louis and St. Louis County ordinances that provide for the option of the borrower to elect mediation between themselves and their lender when a foreclosure is imminent.

                The St. Louis area ordinances seek to prevent mistakes, hardships, and economic loss that all occur during the foreclosure process. In a foreclosure, the lenders don’t simply get the property back that they lent the money for the borrower to purchase. The lenders argue that they suffer from the added costs of going through mediation and that the process usually just delays an inevitable foreclosure. However, if mediation is successful and the loan is modified to terms that the borrower can afford to pay, the lender is back on track to collecting the remaining balance on the loan. The process of getting the foreclosure is much more costly. There are court costs, legal fees, and ultimately the loss incurred when the property almost always sells for well below the original purchase price or its current market value. The lenders are not the only party to a foreclosure that faces financial burdens. The homeowners also face moving costs, legal fees, and the loss of the investment they had made in their foreclosed home. The economic loss, however, is sometimes nothing compared to the stress and anguish involved in a family losing the place they called home, moving away from family and friends, and children changing schools.

                Neighbors also lose out when someone in the neighborhood loses their home to a foreclosure. The foreclosed property oftentimes isn’t maintained properly, due to the homeowner not being able to afford it or because the property sits empty with no one to keep an eye on it. Property values in the neighborhood suffer when this happens and are especially hurt when the selling price of the homes is far less than what it should be.

                If you believe you are in danger of facing a foreclosure and would like to know more about your options with bankruptcy, or if you have any other questions about foreclosure and bankruptcy, please contact our offices to see if bankruptcy may be an option for you.

Illinois Supreme Court Adopts Foreclosure Mediation Requirements

        Last week, I gave an update on the status of foreclosure mediation ordinances in St. Louis City and St. Louis County that are currently being challenged in the courts by lenders in Missouri. On the other side of the river in Illinois, the Illinois Supreme Court has adopted new rules allowing its courts to adopt foreclosure mediation programs that would force lenders to offer court-approved mediation to borrowers who are facing foreclosure on their homes.

            The court rules in Illinois, set to kick-in on May 1, allow Illinois circuit courts to adopt foreclosure mediation programs. Similar to the ordinances in St. Louis, the rule will force lenders to notify borrowers of the availability of the mediation program. The borrower can then elect to participate in the mediation or allow the foreclosure to continue in the court. If the borrower decides they want to participate in the mediation, the lender is obligated to participate as well. However, if an agreement cannot be reached during mediation, the lender is still free to proceed with the foreclosure.

            Illinois, like Missouri and all other states, has faced a large increase of foreclosure proceedings over the past few years. Mediation programs offer the lenders and borrowers a chance to keep the foreclosure out of the court system. Mediation can often times allow for a solution or agreement to materialize without the adversarial setting of a courtroom. The goal of the rule and mediation programs is to offer the possibility of another chance that families across the state of Illinois would be allowed to remain in their homes and avoid foreclosure.

            Another court rule about to go into effect in Illinois requires lenders, at minimum, to attempt to inform borrowers of any programs available in their county that may help to avoid expense in the foreclosure process. This includes notifying the borrower of any free or low-cost legal services available to them and requiring the lender to participate in any program chosen by the borrower. However, the rule requires the borrower to file an appearance or answer to the lender’s complaint. Without doing this, the lender is not required to consider any loss-mitigation programs.

            The new Illinois rules were originally set to go into effect on March 1. However, the court delayed implementing the new rules to determine if they should be applied to cases that are already pending in Illinois courts. Either way, the foreclosure process in Illinois is set to become a little more borrower friendly on May 1. The new rules in Illinois should help to curb the effects of the increase in foreclosure proceedings on Illinois courts and offer borrowers a chance to avoid foreclosure and to remain in their homes.

Loss Mitigation and Bankruptcy

August 3, 2012 Leave a comment

Many people consider bankruptcy due to concerns about their house, whether it is a foreclosure or the inability to afford the home in light of other financial obligations. For the individual debtor the choices, depending on a number of circumstances, are a Chapter 7 or Chapter 13 Bankruptcy. Each comes with advantages and disadvantages. In a Chapter 7 if the debtor is not current on the home he/she will likely see a Motion for Relief from the Automatic Stay filed by the creditor. The Chapter 7 debtor, if behind on payments, will almost certainly lose his home if a Motion for Relief is filed. A Chapter 13, known as a reorganization plan, can save the debtor from a Motion for Relief as arrears are paid through the plan; however, this too comes with its own short comings. A Chapter 13, depending on the debtor’s circumstances may offer the ability to reorganize almost every type of debt, even car loans, but does not allow reorganization of a mortgage.

A handful of courts, including the Southern District of New York, have begun to consider alternatives like Loss Mitigation. These courts are realizing that the traditional options may not be sufficient to address the growing housing crisis. In summary, the debtor can request loss mitigation from the court. The court may order this and then the debtor and creditor must enter discussion of loss mitigation. The court may institute deadlines for correspondence, settlement hearings, and even impose settlements. In New York, the creditor may object to the imposition of loss mitigation, however, there are then restrictions placed on the creditors ability to pursue any remedy to lift the stay. There are some small exceptions to this rule, including if the creditor would suffer irreparable harm.

In any bankruptcy, in any jurisdiction, the creditor certainly has the ability to enter into loss mitigation options with the debtor. The Southern District of New York seems to be shifting the balance of complete power from the creditors to a more balanced approach. In many cases, the creditor simply does not have any incentive to negotiate with debtors and unfortunately pursue more traditional options. Loss mitigation programs, if more widely utilized by the courts, could certainly have a large impact on debtors and foreclosure rates across the nation.

As great as this all sounds, there are some potential issues. There is express statutory authority in the Bankruptcy Code that allows the court to employ these measures, in fact, there are specific provisions stating that judges cannot alter the rights of mortgage holders. This may make judges less likely to force the issue and may make creditors more likely to object if the court does try to impose loss mitigation. While the Southern District of New York’s program has survived at least one judicial attack, the best option may be a revision of the bankruptcy code to ensure that all debtors are treated with fairness and reasonable similarity.

22 June, 2012 22:41

June 22, 2012 Leave a comment

Generally when a debtor files for bankruptcy there is an automatic stay.
There are a few circumstances where the stay might be for a limited time
period or not automatic at all. This is usually when a debtor has recently
had a pending bankruptcy case. It is important that you inform your
attorney of all prior bankruptcies so that he/she can determine whether any
additional motions need to be filed.

The protection of the automatic stay, explained in Section 362 of the
Bankruptcy Code, provides protections for individuals filing for bankruptcy
from garnishments, bank account freezes, repossessions, and foreclosures.
If you are aware of an immediate threat of any of these issues you should
inform your attorney. He/she may take additional steps, including sending
a fax to the attorney handling the collections, to notify that individual
as quickly as possible that you have filed a bankruptcy.
If you are facing a foreclosure you should speak with an attorney as soon
as possible. Filing for bankruptcy can stop a foreclosure, but only if the
bankruptcy is filed before the house is foreclosed. If the threat of
foreclosure is immediate your attorney can file an emergency petition.

Basically, this provides enough information to stop the foreclosure. Over
the next 14 days you and your attorney will need to provide the court with
the rest of the required information to complete your bankruptcy filing.
If you are facing a repossession you need to consult an attorney and file
your bankruptcy as soon as possible. The emergency option, as discussed
above, is available in this situation also. However, in the case of
vehicles, it may be possible to have a vehicle returned after it has been
repossessed. There is a very limited time to have your car returned and to
have the vehicle returned you will have to pay fees incurred, potentially
including towing and storage fees.

If you are facing a garnishment you can file for bankruptcy to stop the
garnishment. As a practical matter sometimes checks are garnished after
the filing date because garnishments are often automatic and it may take a
few weeks to stop them. If this happens you are entitled to a refund of
any money garnished after your case is filed. Unfortunately, nothing can
be done to recover funds from before your case is filed.

If you have questions, or would like to schedule a consultation, contact a
St. Louis Bankruptcy Attorney Today.

When to File Chapter 13, by Bankruptcy Attorney in St. Charles, MO Tobias Licker

If facing foreclosure or repossession, a Chapter 13 bankruptcy filing may be the right option for you

Filing for bankruptcy is an option for some people who are simply buried in debt. An individual, couple or company may file for bankruptcy due to a change in income or a loss of revenue. Certain circumstances may force an entity into bankruptcy, like medical bills or a change in lifestyle, such as a divorce. For individuals and couples, the common options for bankruptcy are filing a Chapter 7 or Chapter 13.

What is Chapter 13?

If facing foreclosure due to some missed mortgage payments, or to keep a car from being repossessed a Chapter 13 filing will allow the individual or couple to create a payment plan to catch up with missed payments. The payment plan may span over a three to five-year period, depending on the household income and the monthly amount of the payment plan.

While the bankruptcy is in process, an automatic stay is put in place to keep creditors from repossessing or foreclosing on property. A few weeks after the initial filing, the Court will schedule a meeting of creditors where the bankruptcy trustee will meet with the debtor to verify the information on the bankruptcy petition. After the creditors’ meeting the court schedules a confirmation hearing to which the debtor does not need to appear. Only those creditors that object to the filing will appear and state their objections to the Trustee. In most cases, there are no objections and the chapter 13 plan can be confirmed.

The Chapter 13 Payment Plan

The Chapter 13 plan sets forth a payment plan for the secured, unsecured, and priority debt of the filer(s). Payments are received by the Trustee and distributed to creditors. A few weeks after the plan is filed with the court, a hearing is held to confirm the plan. If the Trustee does not object and finds that documents provided are “confirmable,” the judge will confirm the plan.

The debtor will make monthly payments to the trustee in form of a money order or cashier’s check. Should the unforeseen happen, and the debtor is unable to keep up with the plan’s payments, other options are in place to reduce payments or to convert the case to a Chapter 7 bankruptcy. A Chapter 7 bankruptcy generally liquidates the debtor’s non-exempt property to pay creditors.

The bankruptcy process is very complicated, and many forms must be filed in a timely manner in order to comply with the mandates of the court, as well as the requests of the Trustee. Retaining the services of an attorney who specializes in bankruptcy in your area is highly recommended to make sure all necessary documents are filed in accordance with the court’s schedule. If you are considering filing for bankruptcy, consult an attorney to find out more about whether you should file a Chapter 7 or Chapter 13.

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