Don't Let It Get This Far, If You Want to Save The House

I have a number of prospective clients come in that are posted for foreclosure, and it is a common refrain from them that their loan modification application has been denied. The mortgage company “lost the papers” or claims to have never received them. Or the client makes too little money, or too much money, to qualify for the loan modification.

Anyway, if you want to keep your home you can’t let the foreclosure sale take place! Here in Texas, at least on foreclosures by mortgage lenders, there is no right of redemption. That is, legally you cannot force the mortgage lender to give you your house back after the foreclosure, even if you pay them all the money (unless there was a defect in the foreclosure sale) unless they agree to do so, which is very unusual.

And the best way to stop the foreclosure sale for most people is to file a Chapter 13 bankruptcy. In Chapter 13, we can help you propose a plan to have a Chapter 13 Trustee begin paying the regular payments to the mortgage company again (they must accept them), and cure the delinquent payments. The payments that you pay to the Trustee are typically deducted from your paycheck, through a mandatory payroll deduction lovingly known as a “Wage Order.”

And if your loan modification was wrongfully denied, you can still continue to pursue it while your are in Chapter 13. In fact, if you want us to help you with it, we are happy to do so. It is possible that you do not qualify for a “HAMP” or Making Home Affordable loan modification, but you may qualify for another type of loan modification.

So whatever you do, don’t let the foreclosure sale happen. Come to me or another experienced bankruptcy attorney to file your Chapter 13 case BEFORE the foreclosure sale. If you wait until after, it is likely TOO LATE to save your home, like I say, except in very limited circumstances.

I have a lot more information available on my main website at www.jthomasblack.com.

Bankruptcy Lawbooks

Once in a while, one of my Chapter 13 bankruptcy clients here in Houston “total” or totally destroys their car or truck during their Chapter 13 case. Not intentionally! But it happens, someone runs a red light and “T-Bones” them, or whatever. Anyway, if there is still a loan or a lien against the vehicle, and the vehicle is being paid through the Chapter 13 plan, what the heck happens?

Well, it depends. The easy way, is to have your insurance company pay the lienholder the balance due on the secured claim, according to the Chapter 13 Trustee’s records. This can be much less than what shows to be due, according to the lienholder’s or finance company’s records. Then you should receive the difference. Example: You wreck your truck, and either your insurance company or the other driver’s insurance company, agrees to pay you $11,000, but of course the lien has to be paid off.

If the truck is being paid through your Chapter 13 plan, and according to the Trustee’s records, there is only $8000 left on the secured claim, then that is all the lienholder is entitled to. You should receive the difference.

Another alternative, is to have your attorney file a “Motion to Substitute Collateral.” This is not so easy, but it can be done. The Bankruptcy Court can order that part or all of the insurance money be used to buy another vehicle, and put the lien of the lienholder on that vehicle, in the same amount that it was. And that amount continues to be paid through the plan from your plan payments.

This option is particularly useful where you are going to need another vehicle, but you are not going to be able to get financing. The Court can basically put the lien that was on your wrecked vehicle, onto the new vehicle. There are a lot of court cases where this has been permitted, and none that I know of, that denied a debtor the right to do this.

If you are just going to go with option 1, above, then you will want to have your attorney file a “motion to modify plan” so that the lienholder does not continue to receive payments through your plan, after they have been paid off.

If you are in the Houston Texas metro area, and need help with your debts, don’t hesitate to give my office a call at 713-772-8037, or visit my main website at www.jthomasblack.com

If You Have A Bad Mortgage Loan, Loan Modification May Be The Answer

Many clients come into my bankruptcy law office here in Houston complaining about their mortgage company, and how it seems like they want to foreclose on them. They have applied for loan modifications, only to have the mortgage company claim that they did not receive the paperwork, over and over again. Also, clients complain about being turned down for a loan modification when they believe that they should have qualified for one.  We often have to file a chapter 13 bankruptcy for the clients to stop the foreclosures from occurring.

We have begun helping clients with loan modifications, just because really there is no other choice. The Making Home Affordable HAMP program will end Dec. 31, 2012, and it’s time to at least try your best to get a loan modification, particularly if you have one of those ARM or Adjustable Rate Mortgages, or some other kind of toxic, predatory loan that was so prevalent during the real estate boom years. For more info  go to www.makinghomeaffordable.gov.

And the federal government has reduced or eliminated funding for housing counselors for the HAMP program, as I understand it. Formerly we were referring people to free government housing counselors. We cannot do our services for free; we charge out usual hourly rate for the services; thankfully it is not a huge investment of time.

If your particular mortgage servicer subscribes to it, we use an internet portal to deliver the documents to them, so there is no doubt that the documents were received by them. Also, sometimes the mortgage companies have violated consumer protection laws, such that we file a lawsuit or adversary proceeding against them in Bankruptcy Court, and in lieu of taking their chances at trial, they often will agree to a favorable settlement of the litigation whereby they give the client a loan modification that lowers their interest rate, puts any arrears into the loan, and pays my attorney fees. This can allow the client to either exit from chapter 13, or at least reduce their monthly trustee payments quite a bit.

If you have a bad mortgage loan, do something about it. And there is no time like the present, there is a lot of political pressure on these mortgage lenders and services to do something. If you are going to try the HAMP program, do so quickly, as it will run out next year, and these things can take a long time to complete. If you are in the Houston Texas area, contact my office at 713-772-8037 or visit our website at www.jthomasblack.com.

In fact, in the most recent year (2005) that the 5 year Chapter 13 plans have now been completed, we have an 66% success rate! 66% of the Chapter 13 cases that we filed, were successfully completed and received a discharge, or converted to Chapter 7.

Only 34% of the Chapter 13 cases that we filed in 2005 were dismissed over the entire 5 year term of their Chapter 13 cases, usually for non-payment, because of loss of a job, loss of overtime, illness or disability, marital issues, etc. Nationally, the completion rate for Chapter 13′s is difficult to find, but it is estimated to be no more than 25-33%. So our firm basically “turns the tables” on the national average, and two-thirds of the chapter 13 cases that we file are successful, whereas nationally only one-third are successful.

That is an outstanding success rate for Chapter 13′s, even if I am “blowing my own horn.”  My excellent staff is a big reason for such a great success rate. Anyway, to celebrate that, and to help our potential new clients get their Chapter 13 cases started, we have started offering a new, lower down payment or retainer.

$349 Down Payment for Chapter 13 Filers with Wage Order ($389 Couple) You can start your Chapter 13 case with our office for as little as $349 for a single filer, or $389 for a couple, so long as you qualify for Chapter 13, you are employed and can have a wage order. Businesses, and people that have filed before are extra.  This is only available to residents of the Houston Texas metro area and surrounding counties (the Southern District of Texas, Houston and Galveston Divisions).

I can’t tell you how pleased I am about our plan completion rate.  We work hard to keep our clients in their cases, by responding to their questions via phone and internet, responding to Trustee Motions to Dismiss when they are filed, and filing Motions to Modify Plan when something in the client’s life changes. You really have to do these kinds of things, to keep your clients in their cases and help them succeed.

J. Thomas Black, Attorney at Law

I’m on hold waiting to speak to an I.R.S. collection agent about a client. He is on Social Security disability, and in “currently not collectible” status with the IRS, but they are still levying his disability check.  Please! $750 per month total income and they think he can afford to lose $115 of that to an old tax debt?

IRS taxes can be discharged in bankruptcy, once they are more than 3 years old, measured from the due date of the tax return, but you must have filed the tax return more than 2 years before you file bankruptcy. And this fellow, well he’s been sick a long time and did not file this return. So his taxes are not cancellable in bankruptcy or we may have just gone that route in dealing with the I.R.S.

There are other options in dealing with IRS taxes, such as “installment agreements” or payment plans, and Offers in Compromise, if you can get the IRS to accept one. But being in uncollectible status is very good, because the IRS has “only” 10 years to collect the taxes from you, once they “assess” the taxes, or determine that they are due. An assessment usually happens within a couple of weeks after you send in your tax return.

If you don’t send in your tax return, like my client, the I.R.S. eventually gets around to doing a “substitute for return” or SFR return, so that they can have the power to seize your property or wages. Without an assessment, they can’t do anything, so they have to prepare a tax return for you from the information that they have. This is not a good thing for you; always file a tax return. If you owe, they will bill you. Eventually you will go to collection. But if you don’t file your taxes, not only is it a crime, but it stops you from having the right to bankrupt the taxes when the time comes.

Well, I talked to the IRS while I’ve been writing this, and they have cancelled the levy on his SSDI check. Happy days. Thanks for reading my blog. If you have any comments or questions, please feel free to post them.

Boy were they sorry they paid the money and hired them! The company proceeded to prepare Chapter 13 bankruptcy paperwork for the husband to sign, and they subsequently filed 3 Chapter 13 cases in a row, because the paperwork was not correct, and the cases kept getting dismissed.

These folks were in very real danger of losing their home, and the darndest thing about it was, the Hispanic couple have about $90,000 in equity in the house; most of these kind of cases, the house is not worth what is owed. Moral to the story: if you want real help with stopping a foreclosure, or if you need help seeking a loan modification of your mortgage, hire an experienced and knowledgeable attorney in your city and state.

Attorneys understand the legal issues involved, can actually represent you in court, and are generally responsible for taking care of your legal matter. An attorney can’t just take your money and not do anything, at least without putting their law license and their reputation at risk. And most attorneys are honest, ethical, and hardworking for their clients.

When you hire some company off of the internet to stop a foreclosure or help you with a loan modification, you are putting yourself at risk. And it seems like most of the scam companies operate out of Florida or California.

And you know, after I got back from court helping this Hispanic couple get their case straightened out, there was another couple that came in for a consultation and they had paid a “loan modification” company several thousand dollars and had also been scammed! It is very common. Please save your money, you can hire real help for the same money or even less.

White House Washington DC Bankruptcy Lawyers Convention 2011

I often have people from Houston Texas and surrounding counties come in to see me, clutching a lawsuit that they were served with by a constable or process server. They seem surprised, that they can be sued for a credit card debt. Yes, it does happen. And if you default on a number of credit cards, you could be served with several such lawsuits.

Once you are served or handed the lawsuit and summons or citation, you only have a limited number of days to answer or respond to the suit, or a default judgment may be taken against you.

You can ignore the suit if you want, and let a judgment be taken against you, but I don’t recommend it. With a judgment, a creditor can seize your bank account, and do other things like try to have a receiver appointed over you and/or your small business. If you try to ignore court orders, you could find yourself going to jail, not for not paying the debt, but for not obeying orders of a court. That being said, some people are “judgment-proof” meaning that they have no assets that can be seized under that state’s laws, and if the attorneys that are suing are not aggressive about collecting, they may never have to pay the judgment.  But it is still an extremely derogatory item on your credit report, so I don’t recommend just having an open judgment.

Of course you can fight the suit, particularly if the suit is brought by a “debt-buyer” or a company that buys

Another option is to go to a legitimate credit counseling service such as Money Management International, but under those programs you typically have to repay 100% of your debt, which most people that come to see me, just can’t do.  And once you are sued, forget about it, the plaintiff is not going to wait on one of those debt management plans to pay them.

Another option is to settle the debt, but I wouldn’t hire one of those debt settlement companies to help; many of them will just take your money and not do anything, or go bankrupt on you. Besides, once you are sued, they won’t help you.  But it may be possible to settle your credit card collection lawsuit, particularly if you hire an attorney. But you have to have money, and to settle them without them taking a judgment against you, you have to have a lump sum, which most of my prospective clients just don’t have. Besides, even if you can borrow the money to settle this one suit, if you have others come down the pike, what will you do then. You will have borrowed money from a friend or relative and then have to consider filing bankruptcy anyway.

Finally, bankruptcy may be an option for you. Either Chapter 7, which results in the complete cancellation or discharge of your dischargeable debts, or Chapter 13, where you pay part or all of the debt back over a period of time. In most cases, my clients report that they have a great deal of relief after the bankruptcy is over, and are glad they did it.

If you are a resident of the Houston Texas metropolitan area, including Harris County, Fort Bend County, Montgomery County, Galveston County or Brazoria County, I’m happy to meet with you to review your options at no charge. Please call my main number at 713-772-8037 to make an appointment, or you can make an appointment directly on my website at www.jthomasblack.com.

Tools of the Trade for a Consumer Lawyer- NCLC Lawbooks

Many people these days are trying to obtain a Loan Modification on their mortgages, often to stave off or stop a foreclosure of their home. We currently have the Making Home Affordable or HAMP Loan Modification program in place, and if you do not qualify for that, your mortgage servicer may, and that’s a big MAY, decide to modify your loan according to some program that they have.

But whatever you do, don’t hire some outfit that you find on the internet to help you get a Loan Modification. I have had clients that have paid thousands and thousands of dollars to some company that claims that they will get them a Loan Modification.

There is no need to pay that kind of money! The government subsidizes legitimate HUD-certified housing counselors to help you obtain a Loan Modification if you need one.

To find a HUD-certified housing counselor, go to http://portal.hud.gov/portal/page/portal/HUD and click on “I Want to Talk To a Housing Counselor.” The best part is, foreclosure prevention counseling and homeless counseling services are available free of charge through HUD’s Housing Counseling Program.

I had a prospective bankruptcy client come in the other day, that had a home in California. They paid $1200 to a company that claimed they could get a loan modification for them. But then the company had the consumer move out, and the company rented the home out. The company then collected $60,000 in rent over the next two years, and did not pay one cent of it to the consumer, or to the mortgage company. And obviously, they never got a loan modification for the consumer. It was a total rip-off.

Folks, don’t fall for such a scam. And don’t stop paying your mortgage payments, if you are able to pay (if you want to keep your home). If you want advice about obtaining a Loan Modification, contact a HUD-certified housing counselor.

If you are posted for foreclosure and/or if you only had a temporary issue with your mortgage, and are now able to afford to pay regular payments, perhaps filing Chapter 13 bankruptcy to reorganize your debts, and allow you time to become current on your mortgage, would be the best thing.

If you are posted for foreclosure or if you want straight advice about stopping foreclosure through Chapter 13, consult an attorney in your area that is experienced in these matters.

Houston U.S. Courthouse where Bankruptcy Hearings and Meetings Occur

As part of our bankruptcy services, after either a Chapter 7 or Chapter 13 case is discharged and completed, we help our clients get their credit cleaned up, at no additional charge. I don’t know how many bankruptcy lawyers do that. We started doing it about 5 years ago, because we would get calls from clients telling us that discharged debts were still showing up on their credit reports.

What happens sometimes, when someone files a bankruptcy, the individual “tradelines” or creditors, just stop reporting to the credit bureaus. So it still looks like you owe money. In the old days, I would send clients a letter with their bankruptcy discharge, and tell them how to do it themselves. But, very few if any of them did it. I guess after a bankruptcy people are just not focused on cleaning up their credit.

But they sure are focused on their credit reports a year or two or three later, when they are sitting in a title company trying to close on a house, or in a vehicle dealership finance manager’s office trying to buy that new car or truck. If your credit is still showing that you owe delinquent debts, it looks like you charged up debt after the bankruptcy and didn’t pay it. I would get calls from people telling me that I didn’t bankrupt their debt right!

So, now as a matter of routine, we prepare the credit reinvestigation letters for the clients to sign, and we see that they are mailed to the credit bureaus, after a bankruptcy is over. The clients receive updated credit reports in the mail within 30 days or so, and almost without fail, the tradelines show a zero balance due, and that the accounts were included in bankruptcy, as they should. Of course we tell the credit bureaus which debts were reaffirmed, if any were, so that those accounts continue to report.

I’m told that our “credit clean up service” increases a former debtor’s credit score by 25-150 points. But don’t get delinquent on NEW debts after a bankruptcy; that will sink your credit score faster than anything. You must maintain good payment habits after a bankruptcy, or you’ll never recover your good credit.

For a very good explanation credit and how it works, go the FTC website and read an article entitled Building a Better Credit Report. We have them available in my law office in Houston and we can hardly keep them in stock.

2600 So. Gessner, Houston TX - Side Entrance of Bankruptcy Law Office

Most of the time, I enjoy my work and am happy to help people with their debt problems. Like this morning, when a Chapter 13 bankruptcy client left my bankruptcy law office in Houston after we had signed her Chapter 13 petition and plan. She said, “I can breathe again,” and was very relieved that the case was being filed and that she would be protected from her creditors.

In her case, the Chapter 13 would stop a repossession, and allow her to pay for a vehicle through her plan. Not only that, it would allow her to pay only the value of the vehicle, as opposed to the full amount due, plus a lower interest rate than provided by the contract. Then when the plan is completed, she gets the title to the vehicle, free and clear.

So long as you purchased your vehicle more than 910 days (about 2.5 years) before filing the bankruptcy, this “cram down” of personal use vehicles is possible. Otherwise, you must pay the full amount due, but you can still lower the interest rate, and pay it out over 5 years, which still can greatly lower the payments.

In this client’s case, we are also paying some I.R.S. Taxes through the bankruptcy, which will keep them from charging her any additional interest. Her other debts were mostly being discharged or cancelled. Her student loans can’t be cancelled, but at least they are stayed (they can’t try to collect from her during the Chapter 13 bankruptcy), and when the case is over, she can seek a payment plan with them.