In our December 8, 2014 Newsletter, we discussed the possibility that the U.S. Supreme Court would come to the aid of Wayne County Homeowners and permit the "strip off" of a second mortgage. What is not widely known is that the Bankruptcy Court for the Eastern District of Michigan has taken the lead in helping homeowners to obtain loan modifications. The loan modification process currently takes place only when the homeowner files a chapter 13 bankruptcy. The loan modification process is not dependent on whether the homeowner is behind in payments on the mortgage. It does not matter whether there has been a prior request for modification. It does not matter if there was a prior rejection to a request or whether there is an ongoing request already in process.
A home is one of the most important assets that a person owns. Not only does a house have a lot of financial value, there is often significant emotional value associated with a family's home.
When you are facing financial challenges, it can be difficult to imagine losing your home. However, through a foreclosure, a mortgage lender can reclaim the property. Thankfully, there are often ways to stop foreclosure and get some debt relief.
This is a very uncertain financial time for many Michigan residents. As the economy continues to recover from the recent recession, many people are learning to live with less. However, many people are stuck in a cycle of borrowing to pay what they owe and struggling to make minimum payments. For many people this has led to creditor harassment and the threat of foreclosure.
People in this situation should know that there are legal options available that can help. In particular, Chapter 13 bankruptcy can be a favorable solution. Through a Chapter 13 bankruptcy, people can eliminate creditor harassment and so much more. By filing for bankruptcy, people can give themselves some breathing room to pay down their debts while keeping important personal property. Through a Chapter 13, people can stop a foreclosure on their house or the repossession of their car, for example.
When Michigan residents are struggling with finances, they often have a lot of debt problems on their mind. In addition to considering debt relief options, debtors in Michigan are also concerned with the possibility of asset forfeiture such as vehicle repossession. For those financing or leasing a vehicle, the repossession of an automobile could occur if the consumer missed a payment or defaulted on their loan. In these matters, it is not only crucial that the debtor understands their consumer rights but also how to stop repossession of their vehicle and even get their vehicle back.
As soon as a consumer defaults on a loan or lease for a vehicle, their contract will state what will occur in this event. In most situations, the failure to make timely payments will result in repossession. There are various options for debtors to avoid or stop this outcome.
Like many Americans, Wayne County residents are starting off 2015 with a new set of resolutions. They want to make changes in the new year, and often those changes are financial in nature. Even for those dealing with serious financial challenges, New Year's resolutions can provide an important opportunity to think about where they are, where they want to be and how to get there.
One bit of advice to keep in mind is to keep financial goals specific, measurable, attainable, realistic, and time-sensitive -- or SMART. In other words, don't resolve just to "get out of debt" or "pay down credit card debt," for example. Those are vague goals not easily measured and without a timeline. Depending on one's debt load, they may not even be realistic.
Now that the holidays are over, some residents in Michigan might be concerned about charges on credit cards and recovering from any accumulating debt. Whether it is credit card debt or any other form or debt or liability, individuals should understand methods to address their financial problems. While some repayment plans help individuals pay back credits more quickly, it is important to understand what method is best for their situation and achieving a fresh start.
One method to get rid of credit card debt or other forms of personal debt is known as the snowball method. This method entails paying off the smallest debts first and working towards paying off larger debts. This method could be very useful and effective, and those seeking to use should not only understand it but stick to the process.
We write often here on our Wayne County bankruptcy law blog about what to expect during the bankruptcy process and the fresh financial start that residents are able to obtain once it's complete. Yet sometimes the psychological gap between sitting at home, staring at bills and credit card debt collection letters, as opposed to getting out and seeking help from a legal professional may seem too great to cross. In order to help out readers understand the point of entry into the system, let's talk about that first meeting in a little more detail.
Some people may be afraid that a bankruptcy professional will expect them to know the answers to difficult, technical questions. This can leave them feeling intimidated. But such is unwarranted, because a legal professional is there to answer your questions, not the other way around. A professional will explain the process and what specifics you'll need to understand for your own situation; he or she will not burden you with irrelevant minutiae.
With the holidays fast approaching, many Wayne County residents will be faced with a difficult choice. Facing financial challenges, how does one handle the shopping season -- cut back on spending, perhaps forgoing special gifts? Or add it on to the growing credit card debt and try to pay it off in 2015 and beyond?
A recent report looked at Americans' credit card habits and found some interesting statistics. One the one hand, the rate of credit card charge-offs has not been this low in almost three decades. That rate, just under 2.9 percent, represents credit card accounts that lenders declared as a loss due to cardholders' nonpayment. Taken in isolation, that statistic would generally be good news, indicating that consumers by and large are able to make their credit card payments and not fall into default.
In our last Wayne County bankruptcy law blog post, we made a reference to the term "debtor in possession." Let's take a little closer look at the meaning of debtor in possession according to the U.S. Courts website. The following is intended not as specific legal advice, but simply as general information.
Once a business has filed for Chapter 11, the debtor named in the filing takes on an additional role, almost like a separate identity. That is the role of the debtor in possession. The term simply means that the debtor keeps its own assets (in this case, the business) while undergoing reorganization. A liquidation bankruptcy, in contrast, would call for the appointment of a trustee to take possession of the debtor's assets. It's possible for a Chapter 11 trustee to be appointed in some situations, but rare.
The U.S. Supreme Court has recently agreed to hear two Florida chapter 7 bankruptcy cases where the 11th U.S. Circuit Court of Appeals has ruled that a bankrupt homeowner with two mortgages on their home may "strip off" or "strip away" the second mortgage. The "strip off", according to the 11th Circuit, can occur where the first mortgage balance on the home exceeds the value of the home. There would be no remaining value left in the home to support the lien of the second mortgage. A "strip off' of a mortgage should be distinguished from a "strip down" or "cram down" of a mortgage. What the latter two words mean is that the mortgage's principal balance is reduced to the current market value of the property which only partially supports the second mortgage. The Supreme Court has ruled in the past that a "strip down" or "cram down" cannot occur in a chapter 7 bankruptcy. It has not yet ruled in a chapter 7 bankruptcy that a second mortgage can be "stripped off" where it is wholly unsecured.