BANKRUPTCY HELPS STOP FORECLOSURES

Its understandable that not being in a financial position to pay your mortgages, lines of credit and the like can lead to a fear of foreclosure. Maybe the lender has already made calls and the process appears to be imminent--or you are already in the process. If you are in a position to file bankruptcy, in addition to the other relief presently available, it can get you in a position to stave off the foreclosure for a significant period of time, and maybe permenantly. It will give you time to potentially refinance, renegotiate, do a short sale, or even prepare to move.

Time is everything in times of financial hardship. Under California law, the quickest a lender was able to conduct a foreclosure sale (really, in California, a sale under a deed of trust) was 4 months from the date the notice of default is served on you. A Notice of Default is a formal notice, served and posted, its not the letter from the bank.

As of July, California has added additional requirements which add 30 more days, at a minimum, and the contact must be very specific to trigger the ability to file the notice of default.

The new law can be found at California Civil Code Sections 2923.5, 2923.6, 2924.8and 2929.3, and California Code of Civil Procedure Section 1161b. The key provisions of the new law provide that:

1. A mortgagee, trustee, beneficiary or authorized agent (hereafter referred to as the "mortgagee") must wait 30 days after contact is made with the borrower, or 30 days after satisfying due diligence requirements to contact the borrower before filing a notice of default.

2. Contact must be made in person or by telephone in order to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure.

3. The borrower must be advised that he has the right to request a subsequent meeting and, if requested, the subsequent meeting must occur within 14 days of the original contact. Any meeting may occur telephonically.

4. The borrower must be provided with the toll-free telephone number made available by HUD to find a HUD-certified housing counseling agency.

5. In order to satisfy the due diligence requirement, the mortgagee must first attempt to contact a borrower by sending a first-class letter that includes the toll-free telephone number made available by HUD to find a HUD-certified housing counseling agency. After that, the mortgagee must attempt to contact the borrower by telephone at the primary telephone number on file at least three times at different hours and on different days. The diligence requirement is deemed satisfied if the mortgagee determines that the borrower's primary telephone number and secondary telephone number or numbers on file, if any, have been disconnected. If the borrower does not respond within two weeks after the telephone call requirements have been satisfied, the mortgagee must send a certified letter, return receipt requested. The mortgagee must also provide a means for the borrower to contact it in a timely manner, including a toll-free telephone number that will provide access to a live representative during business hours, and post a prominent link on the homepage of its internet web site, if any, to the following information:

a. Options that may be available to borrowers who are unable to afford their mortgage payments and who wish to avoid foreclosure, and instructions to borrowers advising them on steps to take to explore those options;

b. A list of financial documents borrowers should collect and be prepared to present to the mortgagee when discussing options for avoiding foreclosure;

c. A toll-free telephone number for borrowers who wish to discuss options for avoiding foreclosure with the mortgagee; and

d. The toll-free telephone number made available by HUD to find a HUD-certified housing counseling agency.

6. A notice of default must include a declaration from the mortgagee that it has contacted the borrower, tried with due diligence to contact the borrower, or that the borrower has surrendered the security property to the mortgagee.

7. If the mortgagee has already filed a notice of default prior to July 8 and did not subsequently file a notice of rescission, then the mortgagee must, as part of the notice of sale, include a declaration that either (a) states that the borrower was contacted to assess the borrower's financial situation and to explore options for the borrower to avoid foreclosure, or (b) lists the efforts made, if any, to contact the borrower in the event that no contact was made.

Bankruptcy adds additional requirements. In a Bankruptcy, the lender cannot do anything without a Court order until the bankruptcy is over. Depending on whether you qualify or it is the best option to file a Chapter 7, 11 or 13, in bankruptcy you might be able to renegotiate your loan, or potentially strip the amount over the value and have the loan only be for the amount of the value. This means, for example, if you loan is now $500,000 but your property is only worth $350,000, in bankruptcy it is possible to make the loan only $350,000.

Lenders are scared. Maybe more than you. If you want to review your situation, don't hesitate to call or email. www.arothmanlaw.com or (310) 461-1395.

THE VP CANDIDATES WERE ASKED ABOUT BANKRUPTCY!

Yes, its been a crazy election season. Last night, as most of you are aware, was the only Vice Presidential debate. It was highly anticipated to see Governor Palin actually be asked real questions and have to give real answers. She really didn't answer many questions, she simply used the ability to respond as a way to speak what she learned the days before about what positions she should take. It was actually quite impressive.

One of the questions asked involved our little subject---Bankruptcy! It warmed my heart to hear it. Like seeing your local high school product make it to the major leagues. It again was quite exciting!

The question was about whether the banking "bailout" (or whatever nice term we should call it) should include the ability for bankruptcy judges to modify home loans. As the law stands now, this isn't allowed---vacation homes it can happen, investment property it can happen, heck, even for cars it can happen, just not your residence. Its been a long standing stand of the banking lobby against it (go figure) and it still hasn't happened.

Well, Senator Biden said it should happen, that it should be extended to the principle of the loan, in addition to the interest. Gov. Palin didn't answer the question---she started talking about health care or energy.

The fact is, if congress gave courts this ability (through a modification of the bankruptcy code) it would save many billions of this mess. If you have any questions about this, and what you can do, don't hesitate to shoot me an email (anthony@arothmanlaw.com ).

PALIN AND BANKRUPTCY

Sara Palin. Whatever. Yeah, I am supposed to be writing about bankruptcy, and its effect on you, but this person could be vice president.

I love Alaska. I have always wanted to go, and will. It has nothing to do with that. Let's see about Ms. Palin and bankruptcy:

1. Googling "Palin and Bankruptcy" the first thing that comes up is:

Troopergate Response Shows Moral Bankruptcy of McCain-Palin Campaign

from this website: http://ohiodailyblog.com/content/troopergate-response-shows-moral-bankruptcy-mccain-palin-campaign

Well, I was trying to find stuff about Palin and bankruptcy in terms of positions on going bankrupt, the current state of the laws, etc. This is about her moral bankruptcy (I don't think it mentions about her daughter, we will leave Bill ORielly for that).


2. There is a website called Pacer. When you are an attorney, or anyone else, you can get an account and look up stuff in Federal Court. Well, in Alaska, searching Palin, there was no bankruptcy. Searching in California, this came up:

Palin, Becky L	(pty)
Palin, Eric S	(pty)
Palin, Grant	(pty)
Palin, Grant	(pty)
Palin, Margaret	(pty)
Palin, Mark T	(aty)

No clue whether these people are related or not. If they are, since Governor Palin is so adept at helping her relatives, I hope she is helping these guys. Otherwise, let us know your position.

WHAT PRESIDENT WILL HELP YOU FILE BANKRUPTCY?

Been watching the democratic convention? Whatever your opinion is of the candidates, it is quite a spectacle. I at least never know if I am watching a unique function of our great countries' constitutional system or some bizarre marketing blitz for the sole function to control us and the world. Who knows. Really, who knows if these people are even real.

Anyways, away from my Paul Harveyesque discussion, the topic here is bankruptcy. In 2005, our great congress and senate, with the blessing of our President, signed the new bankruptcy law that is currently in effect. Let me tell you, the law for those of you needing to file, made things a heck of a lot more difficult. You used to be able to pretty much file a Chapter 7 (liquidation) if you couldn't pay your debts. Now, you have to go through what is called a "means test" to see if you meet standards based on local and national standards. Many can still file, but it certainly has loomed to be a deterrent and has caused many more to seek credit counseling (more on this later) than go through bankruptcy.

The problem with the means test and the hoops is that looking at numbers and looking at real life many times are completely different things. For instance, you look like you make good money (lets say 105,000) but have 4 kids and huge expenses. One kid is sick, you don't have insurance, etc. These may not meet the "means test", but you certainly need bankruptcy, as intended. That is what I am saying.

So, in terms of the candidates, which one is best? Well, Mc Cain was a big supporter of changing the bankruptcy laws, and I believe if you checked out his contributions from the banking industry, it would be consistent with the law helping them out. Obama did not support the change in the law, and has stated that he wants the law to change to help people who have lost jobs, in the military, that are having a particularly tough time. Assuming Obama has congressional backing, he will seek to change the law to make it easier for people to discharge their debts to be able to live.

Mind you, if someone defrauds a bank or anyone, bankruptcy doesn't help. This is for legitimate debts of people who need help. It is a fundamental right of our country (actually in the constitution in Article I-To establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States).

Keep this in mind for you and your fellow Americans when you vote in November.

BUYING GAS CAN HELP YOU QUALIFY FOR BANKRUPTCY

What a loopy world we live in. I mean, we eat, walk around, work hard, and of course, play. For some of us, its a struggle. Well, actually, a lot of people struggle. There are such nice things to do, but they all cost money. Real money.

Until the last few years, we have as a country been able to do stuff with ease. Now, gas. Its almost 5 bucks a gallon. For most of us, it is now a HUGE part of our monthly expense. Believe it or not, it can be used to your benefit if you are in the situation to seek bankruptcy protection.

You see, the Government (yes, the same one that the gas prices have hit these prices) amended the Bankruptcy Laws a few years back to make it more difficult to file. A means test was added as a requirement prior to filing a Chapter 7 bankruptcy. This means that you had to analyze your income and debts, and determine prior to filing whether you made too much to get rid of all of your debts.

Your expenses aren't relevant unless you had income between $6,000 and 10,000. Now, the steep gas prices, it is a legitimate expense that helps one become qualified within these income ranges.

So don't fret---when you drive around and need to fill up, there is a way it can help you that prices are so high!

If interested, go to www.easychapter7.com for information.

WHAT'S UP WITH EQUITY LINES?

Free Checking?

National City. Looks like a nice place. Where dreams come through, don't you think?

Well, many people had equity of lines of credit with this company. Many. They were so easy to get---you have any equity, you get your line. People use these lines for a variety of reasons--vacations, pay credit cards, use for improvements, or simply for no reason. When they got these lines, they signed the documents which obligate them. Most people lived up to their agreements. Most, except of course, National City.

National City's stock price has tumbled, and they got out of the equity line business. Now, they seem to find any reason to cut people off of their credit lines. They did for no reason to a number of customers.

Hopefully, National City's actions will cause them a class action lawsuit, or other karmic actions. It usually does. In today's times, people need certainty, and if National City's actions cause a bankruptcy, or a foreclosure, that is simply wrong.

There are good people who want to help when people are wronged. Please, if you have any questions, drop us a line.