Monday, October 24, 2011

Mass Tort Litigation the Answer? The Jury is still out!

In this edition of ANH Legal's Bankruptcy Blog, we will talk about the various recently filed Class Action, Mass Tort Lawsuits and other lawsuits to stop foreclosures and/or force modifications and/or principal reductions. In the past year, we have received numerous calls from small business owners, property investors, and single family homeowners about these "other" options. However, we have consistently refused to endorse any of these lawsuits because we cannot really say that they work or do not work. The truth is these lawsuits are heavily contested and unproven. Furthermore, the law is usually against you in these types lawsuits as it issues involve a security note which is attached to real property. 

For instance, as discussed in our prior blogs, no one is entitled to a loan mod. The Court's have conclusively held in recent rulings that there is no private right to action (i.e. right to file and enforce) to enforce HAMP (loan modification legislation) or to punish the banks for their loan modification practices. Unfortunately, our politicians drafted HAMP without any enforcement mechanism. In response to the dirty tactics of the banks, these "other" options were born. 

Overall, the following is the basic difference between these two kinds of lawsuits:

A class action lawsuit is a complaint filed by one party on behalf of everyone in a similar situation. Such lawsuits look at the big picture and are useful, for example, to force a company to take a legal action.

A mass tort lawsuit is different. Like class action lawsuit, a mass tort combines many legal cases into a single trial, but unlike a class action each plaintiff is treated as an individual with their own individual lawsuit.

In theory (or as the sales pitch goes), the difference between a Mass Tort and a Class Action is that in a mass tort lawsuit many similar cases are argued together saving time and money that can be better spent preparing to make the best legal case for you. However, the reality is far more ambiguous. Class Action lawsuits are well established and effective if they are properly pled and prosecuted. However, mass tort litigation is a relatively new process with little to no established (an verifiable) track-record of success. As such, the jury is still out as to Mass Tort Litigation.

Overall, the cost of most of these lawsuits is far more than the cost of filing Chapter 7, Chapter 13 or even aChapter 11 Bankruptcy. Furthermore, Bankruptcy is all about a "Fresh Start" and it delivers for most persons as it a based on a well established legal process. However, just like with everything else, Bankruptcy is not a cure to all financial ills and you need the advice of our professional staff to see how Bankruptcy helps you or doesn't!

We at ANH Legal Group have a great deal of practical legal experience in business bankruptcies and personal bankruptcies. Please contact us for a free Bankruptcy Consultation!  

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