Lien Stripping and cramdown

By doug | Published: October 21, 2011

Here’s a little primer on Lien Stripping and Cramdown
by a Massachusetts bankruptcy lawyer who has done many of these cases.

If you are a homeowner and wish to restructure your debt repayment under Chapter 13 bankruptcy it may be possible to have the court discharge the second mortgage on your home through a process known as “lien stripping”. In order to “strip down” or “cramdown” your second mortgage the current value of your home must be less than the balance of your first mortgage. If this is the case then any additional mortgage or liens on your home can be considered an “unsecured debt” because any attempt to foreclose on your property would not even satisfy your first mortgage. To learn more about Chapter 13 bankruptcy and the possibility of eliminating your second mortgage you can speak to a bankruptcy attorney Doug Beaton over the phone or at his North Andover office.

Under current bankruptcy law it is not possible to lien strip the original mortgage on a property that is your personal residence. This is because some or all of that debt is still secured by the remaining value of the property. If a current appraisal shows that your second mortgage is no longer secured by the reduced value of your home, the judge could discharge that amount because it can now be considered an “unsecured debt”. We can discuss the details of what documents the court will need to substantiate your claim when you visit our offices and allow us to evaluate your financial situation.

As an example, if you have a first mortgage for $150,000 and a second for $25,000 but the current market value of your home is only $125,000, there is no remaining equity in your home if it were sold or foreclosed on to pay any of the second mortgage. As part of your Chapter 13 debt reorganization plan, you could be able to have the court “lien strip” the entire $25,000 second by designating it as an unsecured debt. The court can then discharge that amount from the debts you will be required to settle. To learn more about Chapter 13 bankruptcy and the possibility of eliminating your second mortgage through lien stripping call our offices for a free consultation.

Contact me at 978-975-2608 to find out about lien stripping and how to cram down or eliminate a second mortgage on your home.

 

By Doug Beaton

Posted in Chapter 13, Secured loans | Comments closed

Could mortgage modifications use a dose of bankruptcy court mediation?

By doug | Published: October 20, 2011

You are probably aware just how difficult it can be for a homeowner to get a mortgage modification when he or she needs one. Perhaps you have had a personal experince trying to get your mortgage modified, only to be told “no” after submitting reams of paperwork.

Is it possible that a bankruptcy court mediation could help speed up the process, and lead to more modifications, to boot?

Well, such a program is being tried in the Orlando bankruptcy court, where co-operation between the judges and the Chapter 13 trustees has meant the creation of a mediation program WITHIN the bankruptcy court, which so far has an impressive track record getting debtors and lenders to agree on new terms.

Make no mistake about it, there is nothing that a bankruptcy judge or trustee can do to force banks to modify most mortgages. But the respect that the court system engenders seems to have its own special effect, and it tends to bring the parties together. Plus, bankruptcy judges DO have the powere to enforce voluntary agreements made in their courts. Also, each side has a little “skin in the game,” as both the debtor and the bank must pay $385 to defray the cost of the mediation sessions.

I’d love to see the bankruptcy courts serving the Merrimack Valley try something like this. No less than Florida, Lawrence, Methuen, Derry and Haverhill are in an area hard hit by the housing crisis.

I bet there are a lot of folks out there who would be willing to to pay $385 to get their mortgage modification done in bankruptcy court, without the frustration and baloney that they usually encounter.

 

By Doug Beaton

Posted in Bankruptcy News, Foreclosure, Secured loans | Comments closed

The road back from bankruptcy, a case study: the Texas Rangers

By doug | Published: October 19, 2011

The World Series starts tonight in St. Louis, and it wouldn’t be right to let the occasion pass without noting the appearance of the Texas Rangers for the second year in a row.

In June 2010, the team was in bankruptcy court. Later that summer, they were sold at auction to a group that included Hall of Fame pitcher Nolan Ryan (who once played for the team).

Since then, they have won back-to-back American League pennants. And they have a chance to win the franchise’s first world championship since it’s founding in 1961.

Just as important, their ballpark is filled with fans nightly, a good sign in football-crazy Texas.

How’s that for a bankruptcy comeback story?

The World Series probably won’t be as big a draw in the Merrimack Valley area this year due to the hangover from the amazing collapse of the Red Sox, but those of us in the bankruptcy world are sure to be adopted Rangers fans for the duration!

 

By Doug Beaton

Posted in Bankruptcy News, Just for fun | Comments closed

Some bankruptcy fees will be increasing on November 1st

By doug | Published: October 18, 2011

Some of the fees charged by the bankruptcy court will be increasing a bit on November 1, 2011.

The basic fees for filing a consumer case are increasing by $7. These will be $306 for a chapter 7 case, and $281 for a chapter 13 case.

Also starting in November, it will now cost you $30 to amend your schedules after filing (if you are changing schedules D, E, F, G, or H).

It will also cost $293 to file an adversary proceeding. You would need to do this (and pay the fee) in order to get a hardship discharge for a student loan.

Creditors will be paying more, too. Motions for relief from the automatic stay (necessary to continue a foreclosure sale), will cost banks $176 from now on.

If you live in the Lawrence – Methuen – Andover area and are thinking about bankruptcy, give me a call at 978-975-2608, and I’ll figure out a way to keep the price of filing down for you!

 

By Doug Beaton

Posted in The Bankruptcy Code | Comments closed

Bankruptcy court can help if your loan modification goes in to foreclosure anyway

By doug | Published: October 17, 2011

Homeowners who are successful and navigate the often arduous loan modification process are liable to “hit the roof” when they get a foreclosure notice anyway.

Yet this bizarre scenario is probably more common than you would think. The Boston Globe just ran a front page article on how a Lawrence woman is suing Bank of America for just such duplicitous behavior.

Quoted in the article is Kathleen day from the Center for responsible Lending who says ““It is all too common for banks to enter a loan mod and then try to foreclose on people and try to harangue them for money. All the evidence shows that servicing procedures and record keeping are just a mess. It ranges from disarray to out-and-out fraud.’’

Homeowners caught in this nightmare can turn to the bankruptcy court for relief. Chapter 13 of the bankruptcy code can be used to force lenders to accept the terms of their prior bargain, and, of course, a bankruptcy filing halts the foreclosure proceedings and eliminates non-mortgage debt as well.

If you have been caught in this predicament, or know anyone in the Andover, Lawrence, Methuen and Haverhill area who is experiencing a “duel” between morgtgage modification and a simultaneous foreclosure, have them give me a call at 978-975-2608, and we can explore if a bankruptcy filing might be part of the solution.

 

By Doug Beaton

Posted in Foreclosure | Comments closed

Favorite things about being a bankruptcy lawyer

By doug | Published: October 14, 2011

As a bankruptcy lawyer in the Merrimack Valley, I can really say that I enjoy my job. So it was with interest that I read an article by Cathy Moran, who practices bankruptcy law with similar enthusiasm in the San Francisco bay area.

Attorney Moran, a la Julie Andrews, listed her favorite things about the field of bankruptcy law. Among them are:

* The ability to fix people’s financial problems relatively quickly;

* A practice area that brings in a cross-section of clients from different backgrounds;

* The opportunity to be a financial advisor as well as just a lawyer;

* The complexity of the bankruptcy code, as well as the need to know how it affects state laws, keeps her intellectually interested in the subject.

To that perspective, I would add that bankruptcy is essentially a positive area of the law (at least from the debtor’s perspective), where lives are re-built, and it is possible to start over from scratch and have financial success. Seeing the relief in my cleint’s faces as they realize that their financial nightmare is now behind them is one of the joy’s of bankruptcy practice. I don’t mean to say that the economy in the Merrimack Valley is a bed of roses, or even likely to become one soon, but if things are going to get better, bankruptcy law will certainly be part of the economic healing process.

 

By Doug Beaton

Posted in Just for fun | Comments closed

Big trouble ensues over bankruptcy debtor’s failure to list his watch on his bankruptcy schedules

By doug | Published: October 11, 2011

File this under “what not to do” if you’re filing a consumer bankruptcy case: “Forget” to list your Rolex watch on the bankruptcy schedules.

Brian Sullivan, a debtor from Maine, found this out the hard way recently when the First Circuit Court of Appeals denied his discharge. (In other words, he got nothing out of the case, despite filing bankruptcy: he still owes all his debts).

It was, of course, a spiteful ex-girlfriend who blew the whistle on him. She showed up at the debtor’s meeting of creditors and told the trustee that Sullivan had omitted listing the Rolex she had given him on the bankruptcy filing.

Incredibly, Sullivan was wearing a Rolex watch at the meeting.

This set off a round of expensive litigation where it was found that not only was the watch omitted, but the value of the debtor’s bank account and a 1970 Chevrolet Chevelle were understated.

Although the debtor gave the bankruptcy judge some semi-plausible explanations for each of these “problems,” and eventually amended his bankruptcy papers, she concluded he had not proven his case and should not receive a discharge in bankruptcy.

All in all, this case is a prime example of what I tell my clients constantly the fundamental rule of bankruptcy as far as they are concerned is: LIST IT OR LOSE IT!

Had this debtor just been more upfront with the court system from the get-go, chances are his problems would have been much lesser or even non-existant.

 

By Doug Beaton

Posted in Bankruptcy News, Exemptions, The Bankruptcy Code | Comments closed

Friendly’s files for bankruptcy, closes stores in Massachusetts, but not in Lawrence or Methuen

By doug | Published: October 7, 2011

The Friendly’s ice cream chain did indeed file for Chapter 11 bankruptcy protection this week, which was not a surprise, as the filing was widely expected.

What was a surprise was that Friendly’s immediately closed thirty of their restaurants in Massachusetts upon filing.

The Merrimack Valley was spared from the bankruptcy closures for the time being. Friendly’s in Lawrence and Haverhill are still operating, and if you like this chain, I would go there and support them while they re-organize. The Friendly’s Express at the Loop in Methuen (a smaller, streamlined Friendly’s store) is also still open despite the bankruptcy.

Restaurant and retail chains often file bankruptcy cases so they can close money-losing outlets and concentrate on the profitable ones. This usually invloves terminating the long term leases on the stores to be closed. The same move is available to individuals thinking about bankruptcy. If you are stuck in a car lease or a apartment lease gone bad, a bankruptcy filing could get you out of it, too.

 

By Doug Beaton

Posted in Bankruptcy News | Comments closed

Introducing Callstopper Bankruptcy — a way to get rid of harassing collection calls as soon as your first office visit

By doug | Published: October 5, 2011

If you are in debt, there is nothing more infuriating than being besieged by bill collectors on the phone. Unless it’s facing a mailbox full of threatening letters from collectors and attorneys.

I’m Doug Beaton, a bankruptcy lawyer serving the Merrimack Valley for 17 years. What I’m offering you is a way to do something about it — and fast.

If you decide to retain my office for your bankruptcy case and put just $499 down with the retainer agreement, I’ll send (up to 7 of) your creditors notices to stop harassing you the same day you sign up! All you have to do is give me their names and mailing addresses (or just bring your bills to your free initial consultation).

As for the rest of the legal fees and court filing fees, as long as you pay them within 90 days, I’ll apply the full $499 to your Chapter 7 bankruptcy case — and I’ll even give you a special discounted rate in the process!

Which means that the whole debt nightmare can be behind you in three months or less, with your most pernicious creditors held at bay in the meantime!

So if your want peace from the ringing phone, first pick it up — and give me a call at (978) 975-2608 today! My bankruptcy law practice is located on Route 114 in North Andover, and I’m just a short drive from Lawrence, Bradford, Methuen, Haverhill and southern New Hampshire.

Let the Call-stopper bankruptcy plan be your first step on the road back to sane debt-free living!

 

By Doug Beaton

Posted in Bankruptcy News | Comments closed

Possible bankruptcy filing may not shutter Friendly’s in Lawrence, Haverhill, and Methuen

By doug | Published: October 4, 2011

Does a bankruptcy lawyer ever feel sad to hear of a possible bankruptcy filing?

The cynics among you may not believe it, but I felt sad when I heard that the Friendly’s restaurant chain may be filing for bankruptcy as early as this week.

Better news is that the Friendly’s in Lawrence, at the Loop in Methuen, and the one on route 125 in Haverhill near the Plaistow line are likely to stay open after any bankruptcy filing: post bankruptcy petition financing from Wells Fargo appears to have been already secured by the chain.

My dad travelled a sales route when I was a kid so when we went along, invariably there was a lunch, dinner, or ice cream stop at a Friendly’s. With a lot of nostalgia in the place, I hope they make it through the bankruptcy court process, and that better times are ahead.

 

By Doug Beaton

Posted in Bankruptcy News | Comments closed
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