East Bay Bankruptcy Lawyer | East Bay Bankruptcy Attorney

The number of Foreclosures in California and across the Nation continue to rise. If you are facing foreclosure in California we can help. We will work diligently with your lender and/or invoke Federal Court Remedies to facilitate a solution that fits your budget and goals. The following are the most common ways we assist homeowners facing foreclosure.

SHORT SALES

If you find yourself comtemplating a short sale, you deserve to know other alternatives available. For example, if the primary reason you want to short sale your home is because you are upside down with and have a first and a second mortgage/Home Equity Line of Credit, then you should consider Chapter 13. You may qualify to keep your home, pay only the first mortgage and completely eliminate/strip the second mortgag and Home Equity Lines of Credit. Additionally, you should know about all consequences (debt and tax) that short sales will engender. Even after a short sale, you may need to file bankruptcy if the junior lien holder (second mortgage or HELOC) pursues for collection of that debt. Worse yet will be the situation where the deficiency amount after a short sale is forgiven and you face tax consequences that may not be discharged in a bankruptcy. Our experience tells that in almost 100% of all cases short sales should be abandonded and clients either keep their home through a Chapter 13 or the debts are discharged (along with credit cards and other debt) through a Chapter 7.

Mortgage Removal/Lien Stripping

The mortgage removal program is available for individuals desiring to reorganize their debt using Federal Laws under Title 11 of the United States Code. The mortgage removal program can only be used in the context of a reorganization, often referred to as Chapter 13. If you own a home with more than one mortgage, you may be able to completely remove or “avoid” the second and subsequent junior mortgages from your home and county records, thus leaving only the first original mortgage! If you qualify, all mortgages except the first would no longer be secured by your home, and you would stop all payments except the first immediately. There is nothing the creditor can do, provided you qualify for a simpe three part test: 1) The First Mortgage is equal to or higher than the fair market value of the home, 2) You have income, and 3) Your total unsecured and secured debt is certain limits.

As of 2002, the Ninth Circuit Court of Appeals ruled in In Re: Sieglinde E Zimmer, that these mortgages on residential properties can removed if you qualify. In today’s declining real estate market, this ruling pretty much allows junior lien removal on most properties bought or refinanced since 2004. For instance, suppose you have a first mortgage of $400,000 and second mortgage of $150,000, and the house is worth $390,000.00. Under this program, the $150,000 gets eliminated and you only need to make monthly payments on the $400,000 mortgage.

Chapter 13 Reorganization

The Chapter 13 “Reorganization,” allows you to consolidate all your debts into one low monthly payment. The payment amount is tailored to your budget. Chapter 13 is technically a Bankruptcy, but viewed at differently since it is not a "straight bankruptcy" which simply eliminates all debt without any payment whatsoever. Instead, it consolidates all missed mortgage payments or “arrears” and then spreads the repayment out over 3-5 years. The net result is that your mortgage is legally reinstated by Federal Court Order and you continue to make your normal mortgage payments. The lender is also under strict scrutiny to account to the Federal Court any fees they attempt to assert over your normal mortgage payments. For example, if you are $9,000 in arrears on your mortgage and your monthly mortgage payment is currently $2,000, your Chapter 13 payment would be approximately $150 per month. (60 months x $150 =$9,000) The new total monthly house payment would be $2,150, PLUS your second mortgage/HELOC will be wiped clean. The Chapter 13 program results in a more realistic repayment plan than the short term plans currently offered by most lender outside of the laws under Title 11, and you maintain all your rights under TILA, RESPA, HOEPA, FDCPA, FCRA, etc.