Mortgage Modification Mediation

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On February 1, 2017, the United States Bankruptcy Court for the District of Arizona implemented the Mortgage Modification Mediation Program. The program seeks to assist homeowner’s in achieving a home loan modification, if at all possible, thru a mediation program that is overseen by the court.  The program is only available to individuals who file for protection under Chapter 13 of the United States Bankruptcy Code and meet certain eligibility requirements.

Not all homeowner’s will be eligible for the program; however, the program can prove to be extremely beneficial to those who are. The program was created as a way force lenders to come to the table in good faith to enter into meaningful negotiations to modify a mortgage.  It is a way to get the parties talking.  Oftentimes, homeowner’s who attempt loan modifications on their own find themselves in an endless circle of providing documents and trying to prove documents were sent finding no success whatsoever. The Mortgage Modification Program is designed to help alleviate these issues and utilizes systems to track documentation to end the vicious circle.

However, it is of extreme importance to understand that the court cannot force the lenders to enter into any sort of mortgage modification. The court requires lenders to act in good faith and oversees the modifications filed with the Court. As a result, there has been much success with the program to date. Successful negotiations have provided for reduced mortgage payments, forgiveness of delinquent payments, and in rare circumstances reductions of the principal mortgage balance.

Another advantage for homeowners who are delinquent on payments is that although you may be unable to achieve a modification thru the bankruptcy court you may be able to utilize the Chapter 13 bankruptcy filing to reorganize your debts in such a manner that you are able to cure the arrearages over the life of your Chapter 13 plan.  There are several tools available to homeowner’s, whether it be bankruptcy or some other choice. It is important to meet with a competent attorney to understand all available options to you and the detailed components of these programs. Additionally, attorney Jillian Hindo  has served as a Mortgage Modification Mediator for the District of Arizona since February 1, 2017. Contact Hindo Law Group, PLLC at (602) 377-9369 to set up a free consultation with an experienced attorney to learn what options are available to you.

 

Disclaimer: The information in this web site is not intended to constitute legal advice or to create an attorney-client relationship. The information, documents or forms provided herein is intended for general information purposes only and must not be regarded as legal advice. Laws change periodically; therefore the information in this site may not be accurate. It is imperative that you seek legal counsel in order to ascertain your rights and obligations under the applicable law and based upon your specific circumstances.

 

 

 

HOME FORECLOSURES AND LIEN STRIPPING IN BANKRUPTCY

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The filing of a bankruptcy can help avoid a home foreclosure and bring individuals current with their mortgage lenders. The automatic stay prevents creditors from taking collection action, including proceeding with a pending foreclosure or initiating one. A creditor can proceed with the foreclosure only after they obtain an Order from the Court granting relief from the automatic stay. In some instances the filing of the bankruptcy will not only act as a “Band-Aid” for your mortgage issues but can help resolve those issues. A Chapter 13 bankruptcy may be used as a tool to allow debtors to cure their mortgage arrears and bring delinquent mortgages current as long as certain criteria are met. The delinquent payments will be cured via payments made under the Chapter 13 plan and paid back over the life of the Chapter 13 plan. During this time you will also resume paying your monthly mortgage payment to ensure no additional arrears are incurred. At the end of the plan, any arrearages that existed prior to the filing of the Chapter 13 will be cured.

If you happen to have a second mortgage on your principal residence, you may also be eligible to eliminate this lien entirely. A “lien strip” occurs when there is more than one mortgage on a property and the second or even third mortgages are reclassified as unsecured debt.  First a home appraisal is needed to determine the fair market value of your home. You home must lack equity to cover the second mortgage after the first mortgage balance is taken into account. If you are eligible for a lien strip and successfully complete your Chapter 13 plan, then the remaining balance, if any, is discharged as an unsecured debt. The goal of most bankruptcies is to have your debts discharged, or forgiven.  Lien stripping is a complex process and should be discussed in depth with an experienced attorney. Please contact Hindo Law Group, PLLC at (602) 377-9369 to set up a free consultation to learn more about bankruptcy and the impacts on your home.

Disclaimer: The information in this web site is not intended to constitute legal advice or to create an attorney-client relationship. The information, documents or forms provided herein is intended for general information purposes only and must not be regarded as legal advice. Laws change periodically; therefore the information in this site may not be accurate. It is imperative that you seek legal counsel in order to ascertain your rights and obligations under the applicable law and based upon your specific circumstances.

Bankruptcy & Your Tax Refunds

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Tax Refund

When filing a chapter 7 bankruptcy it is important to consider what will happen to your tax refund. The bankruptcy estate is entitled to a prorated portion of your next tax refund and all of your previous tax refund if it was not received prior to filing bankruptcy. The court utilizes a simple formula to determine what portion, if any, of your tax refund must be turned over to the bankruptcy estate.  First, your case will be assigned a Trustee who will oversee your case. The Trustee then has to decide if he or she is interested in the tax refund as an asset of the bankruptcy estate.  In doing so, the Trustee will first determine what the refund consists of. The Trustee will utilize the courts formula and look at what percentage of the year has passed at the point your case was filed with the court and that percentage is the amount of your tax refund which must be turned over to the bankruptcy estate.

There are strategies which can be utilized to ensure you keep your tax refund.  The most important strategy is timing. As long as you play your cards right there is a good chance of keeping your tax refunds. It is important to look at what time of the year you are filing your bankruptcy case and how filing during that time period will impact your tax refunds. You also want to make sure you are not over withholding. Oftentimes, individuals over withhold taxes intentionally so they can receive a large tax refund. When preparing for a bankruptcy it is important to not over withhold as there is a possibility of losing that large tax refund.  You should have your attorney guide you through the process, applying your unique circumstances to the applicable laws. To learn more about bankruptcy and the possible tax consequences please contact our office to speak with an experienced attorney.

Disclaimer: The information in this web site is not intended to constitute legal advice or to create an attorney-client relationship. The information, documents or forms provided herein is intended for general information purposes only and must not be regarded as legal advice. Laws change periodically; therefore the information in this site may not be accurate. It is imperative that you seek legal counsel in order to ascertain your rights and obligations under the applicable law and based upon your specific circumstances.

Bankruptcy Exemptions

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Exempt

Bankruptcy Exemptions- How They Work

One of the most common questions related to filing a bankruptcy is “can I keep my property?”
The answer is “it depends.” Most states provide exemptions allowing a debtor to keep certain
property, no matter how much debt they owe to creditors, and will not require the debtor to
turn the property over to the bankruptcy estate so long as the debtor is eligible to use the state’s
exemptions.
In Arizona a debtor may use the state’s exemptions only if they have lived in Arizona for at least
2 years prior to the filing of their case. If they have not, the debtor must then look to the state in
which they did reside for the greater part of the preceding two or more years for guidance as that
state’s exemptions or the federal exemptions may apply.
Individuals are not required to surrender their houses or cars in bankruptcy as long as they do
not exceed the equity limits in the exemptions. Exemptions apply to equity in real and personal
property, including but not limited to homes, cars, wedding rings, clothing and household
furnishings. For example, if you own a vehicle and it is worth $12,000 and you owe $9,000 on
the vehicle, you would have $3,000 of equity in the vehicle. In Arizona, the exemption provides
for up to $6,000 equity in a vehicle. The vehicle in this example has only $3,000 in equity
and the debtor would not be required to turn their vehicle over to the bankruptcy estate as it is
“protected.”
Additionally, if a debtor has a secured debt on a home or vehicle and it is below the equity limits
in the exemptions, the debtor may keep those items as long as they continue making payments on
these debts.

If you are considering bankruptcy please contact our firm to set up a free consultation with an
experienced bankruptcy to determine which alternative is best for you.

Disclaimer: The information in this web site is not intended to constitute legal advice or to create an attorney-client relationship. The information, documents or forms provided herein is intended for general information purposes only and must not be regarded as legal advice. Laws change periodically; therefore the information in this site may not be accurate. It is imperative that you seek legal counsel in order to ascertain your rights and obligations under the applicable law and based upon your specific circumstances.