How Conflict of Interest Leads to Foreclosure

When a mortgage is taken out by a homeowner through a bank the homeowner is often unaware that the bank merely acts as a middle man. Banks will often collect monthly mortgage payments and pass them along to large lenders such as mutual funds. When banks create a front for a large investor they are obligated to keep the best interests of the true lender in mind when dealing with borrowers. This is simple enough when borrowers keep up to date with their payments for the bank is spared the trouble of chasing down defaulting homeowners.
The trouble occurs when homeowners take out a second lien from the bank itself and are unable to make either of their mortgage payments. The bank should be asking the borrower to pay the first lien before the second one however a conflict of interest occurs. The bank aims to keep its account books in a state that reflects profits rather than defaulting loans. This conflict of interest persuades the bank to ensure that the second lien is paid off before the first lien despite the first lien slipping into delinquency and then foreclosure.
The governments attempt to balance this conflict has come in the form of laws that allow mortgages to modified which allows homeowners who are at risk for foreclosure to retain their homes. However this law has been ineffective due to the conflict of interest that occurs with banks. The Democratic representative Brad Miller from North Carolina is aiming to fix this blind spot in the law by proposing a new law which will keep banks who act as the middle man for a first lien to become the lender of a second lien to a homeowner. This law, if passed, will eliminate the banks ability to redirect payments to facilitate payments for their bank and homeowners defaulting on their first liens.

If you are having financial difficulty the first bill that needs to be paid is the first mortgage. It should be paid just after your food, the heat and lights but before credit cards or the second mortgage.

Contact the Law Offices of Gregg W. Wagman at:
216 Broad Street
New London, CT 06320
860-444-0100 office
wagman@attorneywagman.com

Serving the Eastern Connecticut region including the Northeastern towns of Thompson, Putnam,Brooklyn, Colchester, Willimantic, Marlborough, Lebanon and Plainfield and the Southeastern towns of Old Saybrook, Old Lyme,East Lyme,Waterford, New London, Groton, Salem, Ledyard, Montville, Mystic, Norwich, Voluntown, Preston, Stonington, North Stonington and New London.

What to Expect at a Bankruptcy Meeting of Creditors (aka 341 Meeting)

A 341 meeting is something that debtors filings for Chapter 7 bankruptcy in any state will face. It is a meeting that occurs with you, your spouse if they are also filing, your attorney and an attorney appointed by the court to review your case (aka trustee). It is crucial to understand that the trustee is not a judge but an attorney like the one you have hired for your bankruptcy. The trustee’s job is to ask questions about your bankruptcy that you answer while under oath. This meeting is designed for creditors to have a forum to challenge the discharge of your debts. They are welcome to come to the meeting but most often there will not be any creditors present for your meeting.
You may be wondering what type of questions the trustee will ask of you and how you are to respond. The trustee will begin by asking simple questions such as your name, address and if the signature on the filings forms is your signature. The trustee will then move on to ask questions such as when did you buy your home, how much you purchased it for, and if you are current on your mortgage payments. The trustee may also ask if there were improvements made to your home and how much you paid for the improvements to be completed. The trustee will proceed to inquire about what other land you own and its worth as well as if you ever tried to sell it and at the price at which you listed it. Motor vehicles are often the next subject of questions for trustees. The price you bought your car for, its current condition, and if you are current on payments on a car that has not been fully paid off will be the nature of the questions asked. The trustee will ask if you had any bonds, safes, casino chips on the date of filing. The trustee also asks if you have gotten any money from someone who has passed away in the last six months and informs you that if you do in the six months after filing the bankruptcy you must notify your attorney and the trustee. The trustee may ask how your financial situation has deteriorated and be sure to calmly and clearly explain your situation. A trustee may ask more detailed questions on any matter for each bankruptcy is different.
These questions are quite simple and if time is needed for you to mentally collect the information it is recommended that you do for a correct answer after a second if preferred over a babbling response that confuses the trustee and yourself. If you need the trustee to clarify what they mean by their question feel free to ask them so for you are under oath to speak the truth and an incorrect answer due to uncertainty can harm your case. Your attorney will be present so if you have any doubts you can ask them for assistance for they are familiar with your case. You should not answer these questions with answers beyond yes or no for offering more information on the questions will not help your case but will most likely harm it. If the trustee does not require an elaboration do not offer one. Debtors often make the mistake of offering too much information about their case which can lead a trustee to believe that you have more money in your assets than you truly do which can lead to your debts not being discharged.
Debtors must have a government issued photo identification and proof of their social security card. Most importantly debtors must relax for their own nerves will make this short meeting seem like an interrogation.

Contact the Law Offices of Gregg W. Wagman at:
216 Broad Street
New London, CT 06320
860-444-0100 office
wagman@attorneywagman.com

Serving the Eastern Connecticut region including the Northeastern towns of Thompson, Putnam,
Brooklyn, Colchester, Willimantic, Marlborough, Lebanon and Plainfield and the Southeastern towns of Old Saybrook, Old Lyme,East Lyme,Waterford, New London, Groton, Salem, Ledyard, Montville, Mystic, Norwich, Voluntown, Preston, Stonington, North Stonington and New London

Increase in Bankruptcy Filings

There has a been a drastic increase in the number of consumers filing for bankruptcy in the first six months of 2010. This increase is seen in most of the 50 states but is most prevalent in the southwestern and southeastern portions of our nation. While these areas of the country are facing an increase in bankruptcy filings states such as Washington DC, South Carolina and Alaska have the lowest rates of the nation.
However, these states are not immune to financial woes. There has been a 14% increase in the number of bankruptcies filed nation wide during the first six months of 2010. Bankruptcies were at their all time high in 2010 during the month of March for consumers utilized their tax refunds to file for bankruptcy by using the money to pay attorney’s fees. The number of bankruptcies are slowly decreasing as summer comes however the number of consumers filing for bankruptcy is still higher than in the summer of 2009.
The increase in bankruptcies is limited to Chapter 7 bankruptcies for they are simpler and do not involve consumers attempting to save their homes. Chapter 7 is currently popular for homeowners do not see the value to paying their mortgage when their home equity is not rising regardless of the payments they make. It is simpler for homeowners to walk away from a mortgage they are struggling to pay and that is yielding them very little.
As the number of consumer bankruptcies are increasing so is the amount of corporate bankruptcies. These bankruptcies are well known in the nation yet they only make up 10% of all the bankruptcies filed.
This increase in bankruptcy filings is predicted to be an all time high since stricter laws were passed in 2005. The American Bankruptcy Institute estimates another 1.6 million bankruptcies to be filed this year alone.

Contact the Law Offices of Gregg W. Wagman at:
216 Broad Street
New London, CT 06320
860-444-0100 office
wagmanstaff@gmail.com

Zombie Debt Collectors

Zombie debt collectors are not the deceased bodies of collectors that attack you but are collectors who attempt to collect debts that are long gone. They purchase the rights to your debt from creditors for cheap and will call debtors and attempt to coerce a payment. They can call at any time during the bankruptcy process including after the bankruptcy has been closed. How do they convince debtors who may get their debt discharged to pay their debt? They offer debtors a special offer such as paying a fraction of their original debt to erase the debt completely. This is the main weapon of zombie debt collectors for the debts they are attempting to collect are not legally enforceable. This means that these collectors cannot force debtors to pay off their debt and have no choice but to entice debtors with a reduced payment option.
Zombie debt collectors are not only monstrous for their attempts to lure debtors into paying their possibly dischargeable debt but because they may even try to collect debts that have already been discharged. These collectors prove their immorality by collecting debts that have been already discharged is illegal. Zombie debt collectors are much easier to ward off than their deceased zombie counterparts for they can thwarted by speaking to you attorney, refusing to give them your personal information and not paying off any debts until you are sure of your rights in the matter. These simple practices can keep them at bay and from entangling you in illegal actions or a financial faux pas that could negatively effect your bankruptcy.
in Connecticut most revolving debt that no payments have been made on in the prior six years is past the statute of limitations.

If you have questions about how bankruptcy might help you Contact the

Law Offices of Gregg W. Wagman at:
216 Broad Street
New London, CT 06320
860-444-0100 office
wagman@attorneywagman.com

How Helpful Are Debt Settlement Companies?

Debt Settlement Agencies are companies that will communicate with a debtors creditors in order to reduce one’s debts. These companies reduce the need for the creditor and the debtor to interact which is alluring to debtors who wish to end phone calls from their creditors. These companies often quote their clients a small fee and that their debts will be greatly reduced if not irradiated.
Debt Settlement Companies seem to have the solution to debt with their promises of completely eliminating debt while only collecting a small fee. When the solution seems so simple, and cheap why would someone opt for bankruptcy? Bankruptcy attorneys, unlike debt settlement organizations, are able to protect their clients from wage garnishments, liens on their property and lawsuits by their creditors. Filing for bankruptcy can also ensure that you will not face trouble once you have reached the bargaining stage in your settlement process.
In some states debt settlement organizations are not legally allowed employ certain legal strategies during bargaining that attorneys are able to. If a debt settlement company uses these methods to attempt to reduce or discharge your debt the contract you have with the settlement company may not be acknowledged in court. Another path through which your contract with a debt settlement agency would be seen as void in a court is if your state has a law that only allows for “debt adjustment” to be done by a certified nonprofit organization or an attorney. Losing the validity of your contract with a settlement agency would undercut all that you have paid the settlement agency for their services and they would not be allowed to aid you any longer in your settlement process. Filing for bankruptcy can protect you from this unpleasant turn of events during the bargaining stage.
Another reason to chose bankruptcy is that it is a cheaper alternative to a debt settlement agencies. Bankruptcy attorneys base their fees on the complexity of your case and the type of bankruptcy you are filing for while debt settlement companies take a percent of your debt, usually 15-20%, as a fee for their services. This can greatly increase your financial woes for if your debt settlement agency is unable to reduce your debts you owe another large amount of money to the settlement company.
Debt settlement agencies promise to discard your debts however the federal trade commission states that these claims are not backed by facts. Debt settlement agencies are not given any additional powers by the law, especially not any that can pardon you from your debts. Bankruptcy is a process that was created by the law to aid those in debt which gives you a structured procedure to reduce your debts. If the law were to favor any one channel to reduce or eliminate debt wouldn’t it be the one it be the one that involves an attorney, someone the law has granted power to, and the process that the law created?

Why Choose Chapter 13?

When filing for bankruptcy you must know whether you are filing for a Chapter 7 bankruptcy or a Chapter 13. There are many differences between the two for they are configured for people in different situations.
Chapter 7 bankruptcy is designed for people without a steady income and who do not wish to hold onto their property. It allows a large amount of debts to be discharged for it is unlikely that the debtors will be able to pay off their debts over time. Chapter 7 is a shorter process than Chapter 13 for it takes 3-4 months and is simpler process. However, Chapter 7 does not allow for certain debts to be discharged such as student loans, support, alimony, recent taxes mortgages and car payments.
Chapter 13 is created for people who have a steady income which is around, or higher than the median 6 month salary for their state. Chapter 13 is also useful for individuals who are in risk of losing their car or home. This property can be lost under a Chapter 7 but will be secure under a Chapter 13 bankruptcy. Chapter 13 can be utilized by those with more than one mortgage and are facing foreclosure on their properties because they are unable to pay all their mortgages currently. This type of bankruptcy is useful for people who have a car that they wish to keep and is worth much less than their debts for Chapter 13 will protect their automobiles. This form of bankruptcy will protect a co debtor while a Chapter 7 bankruptcy would not. Chapter 13 bankruptcy is the path that debtors chose when they wish to sue a creditor for disregarding their states’ anti-harassment laws. Another reason people chose Chapter 13 is because they have debts that will not be discharged under Chapter 7 and wish to have a plan that will allow them to pay those debts off over time. Similar to Chapter 7 Chapter 13 also has certain forms of debt that are not discharged. These include alimony, support, student loans, court fines, recent back taxes, taxes for years that they did not file for a return, debts owed for a civil judgment due to willful and malicious behavior, personal injury or drunk driving.
The similarity between Chapter 7 and Chapter 13 are the debts that will not be discharged for many of the types of debts that will survive bankruptcy in Chapter 7 exist in Chapter 13.

“Forensic loan auditors” prey on homeowners in debt. They promise to completely wipe out loans no matter what you’re situation by investigating your mortgage loan. If they promise to find legal issues with your loan that will allow you to sue your lender which they claim will speed the process to alter you loan. The Federal Trade Commission says that there is no guarantee that this will occur even if the foreclosure audit is completed by a licensed lawyer for if mistakes are found in loan document it is not mandatory for your lender to modify your loan. If this so-called loan expert advises you to cancel your loan you may lose your home and still be required to continue to pay your lender.

How to Spot a Fraud

• ask you to pay money upfront without rendering any services
• advises you not to contact your lawyer, loan lender or credit counselor
• recommends that you lease your home so you can buy it back slowly overtime
• tells you not to make payments to your lender but rather to make them directly
• advocates transferring your property deed or title
• urges you to sign contracts you did not read or do not understand
• proposes to purchase your house for an amount that is irrational for the current real estate market

If you believe you are or have been conferring with a foreclose fraud contact the Federal Trade Commission at www.ftc.gov

It depends. If you are current on your mortgage and all of your other bills a short sale is probably the better option. It will drop your FICO (credit score) score 85- 160 points. You may be able to purchase a new home fairly soon after the sale – BUT it may be difficult to find a lender willing to give you a mortgage.

If you are already behind on your mortgage or behind on your other bills your FICO score has already dropped. Late payments have the biggest affect on your credit score.

30 days late: 40 to 110 points
90 days late: 70 to 135 points
Foreclosure, short sale or deed-in-lieu: 85 to 160
Bankruptcy: 130 to 240

if you cannot maintain the payments on your bills Foreclosure can take four months to over a year to complete. During this time you may be able to remain in the home until the completion of the foreclosure meaning you are not paying a mortgage payment or rent.

In either situation you will not want to pay the difference between what you owe and what the value of the home is. (deficiency) There are possible tax consequences for the deficiency in a short sale that are not an issue in a combination foreclosure/bankruptcy.

If you are behind on your bills and your mortgage a bankruptcy can clean up the outstanding debt and delay a foreclosure. In this situation it is significantly more beneficial to the homeowner to let the home go in a foreclosure with a bankruptcy filed in a timely fashion.

Can I keep my house or car in a bankruptcy?

Yes – for most people.  Most people that file a chapter 7 or 13 bankruptcy are able to keep their house or car through the bankruptcy process.  Any competent bankruptcy attorney will be able to tell you if you will be able to retain those items in an initial consultation.  Equity (amount of money you get after the item is sold)  in the property is protected from the creditors up to certain dollar amounts depending on your personal situation.  These amounts vary depending upon the situation that you are in.  You will have to become well versed in bankruptcy law or see an attorney in order to get the full benefit of  these amounts.  Bankruptcy petition preparers are not allowed to advise you on the best way to maximize the benefit to you that a bankruptcy can give you.

I offer a free initial one-half hour consultation to look at your situation and advise you as to your options.  (Look at it as free legal advice from someone who does bankruptcy for a living.)

annualcreditreport.com is the federally mandated web site to get your free credit report.  You are able to get 1 free credit report per year from each of the three major credit reporting agencies.  The other web sites that promise free credit reports are not free. (including the ones with the catchy songs.)

If you go to annualcreditreport.com you are then redirected to the web sites of the major credit reporting agencies.  When you get there the credit reporting agencies then try to sell you stuff like credit protection or your FICO  (credit) score.  You do not have to pay any money for your credit report.  Usually in small print in the bottom right hand corner it says annual credit report.  Click on this link and again on the next page until the web site asks you some questions.  You have to answer the questions correctly to insure that it is you getting the report.   When you complete the  questions your credit report should pop up and you will be able to print it out.  You can get one of these from each of the top three credit reporting agencies per year.  (Equifax, Transunion, or Experian).  If you pull one every 4 months you can keep updated on your credit throughout the year and catch any problems as they occur.