ANH Bankruptcy Blog | Los Angeles | Woodland Hills

California's One Action Rule

2012-01-22T12:09:00.000-08:00

In this week's edition of ANH Legal Group Bankruptcy Blog, we will second home mortgages and the lender's enforcement of the same. In the past few months, we have received many calls lately from California homeowners (and even some commercial business owners) asking us if their lender can hold them liable for their second mortgage in California. And if so, can they sue them on the note without first seeking the foreclosure route.

At issue, California's One Action / Security First Rule of California Code of Civil Procedure Section 726(a) and its interpretation. In most cases, a junior lien is not going to foreclose on mortgage that is underwater either judicially or non-judicially. The reality behind the above is that the junior lien holder gets paid after the first mortgage holder (the senior lien holder) is pain in Non-Judicial Trustee sale or following the Court ordered sale of the property in a Judicial Foreclosure. In the current declining property market, most second mortgage holders are not often left holding a lot of “security” for the loans they gave to borrowers. As such, the junior lien holders have very little recourse if their lien has no value.

Solutions:

In a Chapter 13 Bankruptcy case, a homeowner is able to avoid the junior lien on his/her property if the lien is no longer secured by the property because of devaluation.

Solutions:

In order to avoid foreclosures, a homeowner can enter into an agreement with his/her lender to turn over the deed of the property to the bank and walk away. This is call Deed in Lieu of Foreclosure.

Solutions:

In order to avoid foreclosures, a homeowner can enter into an agreement with his/her bank to short sale the property and walk away.

We at ANH Legal Group have a great deal of practical legal experience in handling foreclosure. We are also able to provide with you with you full spectrum of Bankruptcy options under Chapter 7, Chapter 11 and Chapter 13 of the Bankruptcy Code. Please contact us for a free Bankruptcy Consultation!

New Action Against the Illegal Foreclosure Tactics of the Banks

2011-12-03T14:54:00.000-08:00

In this week's edition of ANH Legal Group Bankruptcy Blog, we will discuss the status of the global "settlement" that is being "negotiated" on behalf of the American consumer by the Attorney Generals of several states. As we all know, foreclosures are at and all time high with many more to come. As we all also know, the Banks have not been playing fair with the way they are foreclosing on homes, handling loan modifications, and have generally failed to abide by the foreclosure laws of various states.

This week we learned that the discussions on the Global "Settlement" with the Banks are not going well at all. After nearly a year of negotiations, it appears that the discussions will not yield a deal which is good news for the American consumer. As it stands, the banks have modified very few loans and have shifted their focus from loans to new sources of revenues i.e. FEES. In sum, this global "Settlement" would just allow these greedy banks to walk-away from all the harm they have caused!

The negotiations were jolted this week when the Attorney General of Massachusetts filed a lawsuit against Bank of America, JP-Morgan Chase, Citigroup, Wells Fargo and GMAC Mortgage to stop the "unfair and deceptive business practices" of these banks in their foreclosure processes. Coakley is seeking damages for borrowers who were hurt by these banks foreclosure practices, which range from filing fraudulent legal paperwork to the use of so-called "robo-signers" and refusing to follow lending laws.

"Whether those institutions believe they are too big too fail, they certainly have demonstrated they believe they are too big to care about the impact of their actions. We believe they are not too big to have to obey the law," Coakley said.

Overall, many had believed the banks would have reached this overarching "settlement" with all the states, rather than see it go to litigation. The banks are self-servingly arguing if there is an out-of-court settlement soon, it would be better for homeowners than lengthy litigation. The "settlement" would include, presumably, some sort of immediate compensation to homeowners across the country but in reality this settlement would be pennies on the dollar!

We at ANH Legal Group have a great deal of practical legal experience in handling foreclosure and repossession matters. We are advocates for the little guy! Please contact us for a free Bankruptcy Consultation!

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

2011-10-24T21:05:00.000-07:00

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!

Business Bankruptcy and its Effect on its Owners

2011-09-29T11:31:00.000-07:00

In this edition of ANH Legal Group's Bankruptcy Blog, we will discuss Business Bankruptcy filings and its effects on its owners and officers (personally). In the past year, we have seen many family owned small to midsized companies succumbed to the current recession by filing for Chapter 7 Bankruptcy. Some of these companies try to file for Chapter 11 Bankruptcy for Reorganization at first but in the end they all head to liquidation under Chapter 7 of the Code. In virtually every filing, our clients' biggest concern relates to personal liability for corporate debts and obligations.

Overall, very few small to mid-sized corporations have sufficient corporate credit to avoid the required personal guarantees for office leases, loans, vendor contracts, supplier contracts, and other business related obligations. Furthermore, in most family owned small to midsized companies, the owners of the company tend to commingle personal funds/debts with company funds. For instance, the owners of many family owned small to midsized companies have credit cards in the name of the business but these cards are all personally guaranteed. In such instances, if the corporation declares for Bankruptcy its credit card debt would shift to the personal guarantee. If the owner declares for Bankruptcy, the credit card debt would shift to the corporation. In sum, (unfortunately) usually there is no way to untangle the owner from the Company legally in Bankruptcy when company funds/obligations are commingled with personal ones. As such, the owners of most family owned small to midsized companies usually have to declare Bankruptcy along with their corporation to truly get a fresh start.

We at ANH Legal Group have a great deal of practical legal experience in business bankruptcies. If you need help restructuring your business, please do not hesitate to contact us.

The Foreclosure Crises Continues!

2011-08-31T22:28:00.000-07:00

In this edition of ANH Legal Group's blog, we will discuss the on-going foreclosure crises in this country and how the end is far from near. Believe it or not there was a lull in foreclosure activity in the past 9 months due to the fact that in many states the banks were caught using and filing false documents to foreclose on home. These issues stopped many homes from being fully foreclosed upon but these issues have been "resolved" as far as the banks are concerned and the foreclosure machine is back to full throttle forward.

In the past several weeks, we have seen a surge in clients filing for Chapter 13 Bankruptcy to stop an imminent foreclosure as lenders are moving full speed ahead with foreclosure without any regards to the status of a loan modification file or a pending short sale of the property. Foreclosures, have become very mechanical and factory like!

After the problems with the foreclosure tactics of the banks became too pervasive to ignore, the Attorney Generals for all 50 states began an "investigation" into the practices of the banks. Not much is known about the results of these investigations, but it appears that a possible settlement of the50-state probe of foreclosure practices is in the works. Overall, state and federal officials are negotiating a settlement with the five largest mortgage servicers, including Bank of America in Charlotte, N.C., and JPMorgan Chase in New York, over their servicing and foreclosure practices. The word is they are going to give the banks a complete pass with a blanket immunity!

If a deal is reached, the banks will be provided with immunity for all they have done and they are absolved of all liability for their fraudulent tactics.Overall, the failure of HAMP combined with the faltering economy will continue to make things difficult for the real estate market and make things even more difficult for small business whom are being driven to Bankruptcy in record numbers!

There is no private right to enforce HAMP

2011-07-22T18:15:00.000-07:00

In this edition of ANH Legal Group's Bankruptcy Blog, we will discuss the latest case law on loan modifications. In the past few years the overwhelming number of our Bankruptcy clients facing a foreclosure have tried to obtain a loan modification without much success. In most cases, homeowners have been disappointed to learn that the banks are not really interested, motivated or structurally able to provide relief to homeowners.

As a result, there has been a great deal of litigation on the HAMP and other loan modification programs offered by our national lenders. In California, a great many lawsuit have argued that because California Civil Code § 2923.5 has been interpreted to provide a private right of action that was not specifically stated in the statute, so too should HAMP. However, as per the recent Court rulings, the Court's have declined to hold that a private right of action exists for violation of HAMP. While it is true that a private right of action has been read into Section 2923.5, HAMP is far too different to make a good comparison. Mabry v. The Superior Court of Orange County, 185 Cal.App.4th 208, 225, 110 Cal.Rptr.3d 201 (Cal.Ct.App.2010) (finding a private right of action under Cal. Civ. Code § 2923.5).

The above ruling has been much critics as both of these laws generally involve homeowner foreclosures. However, the Court has responded to these criticism by arguing that Cal. Civ. Code § 2923.5. is a state statute requiring lenders to contact a homeowner before filling a notice of default and has the “obvious goal of forcing parties to communicate” while HAMP does not. Mabry, 2010 Cal. App LEXIS 794 at 26; See also Cal. Civ. Code § 2923.5. As such, the Court's have reasoned that Section 2923.5 creates an inherently individual right that would be meaningless without individual enforcement. Mabry, 2010 Cal. App 4th at 224. HAMP, on the other hand, is a federal program that facilitates mortgage modifications for borrowers in danger of foreclosure.

In sum, as per recent case law the Courts have ruled that lenders are generally not required to provide loan modifications for borrowers that qualify under HAMP nor does the servicer's agreement confer an enforceable right on the borrower. Escobedo, 2009 U.S. Dist. LEXIS 117017 at *6. The Court in this case reasoned that a comparison of the Cal. Civ. Code § 2923.5. and HAMP do not support a private right of action under HAMP.

If you are facing a foreclosure and need bankruptcy advice, feel free to contact our office and obtain a free consultation.

Are lawsuits against the collection agency for violation of the FDCPA really an effective way to curtail abusive collection methods?

2011-06-29T09:38:00.000-07:00

In this edition of ANH Legal's Bankruptcy Blog, we will discuss legal and illegal collection actions and recent rulings on Debt Collection practices.

A few months ago, the United States Tenth Circuit Court of Appeals was confronted with an interesting case involving a person who received approximately 300 calls over two and a half years from a collection agency. What made this case interesting is that the collection agency was collecting on two debts that did not belong to the person (Plaintiff) they were trying to collect. Apparently, the collection agency made a "mistake." While the plaintiff informed the collection agency that it had the wrong number, the agency continued to place calls to the plaintiff. In no time the Plaintiff go sick of the calls and eventually filed a lawsuit against the collection agency for violation of the Fair Debt Collection Practices Act (or FDCPA for short). Despite the number of calls, the trial court found that the collection agencies conduct, while unfortunate for the plaintiff, did not rise to a violation of the FDCPA. However, the appellate court viewed the collection agency’s conduct in a different light. While not ultimately concluding that the collection agency was a violation, the appellate court found that a jury could find that it was. The appellate court, in its ruling, stated that “a ringing telephone, even if unanswered, can be harassing...”

In the end, the collection company got away in this case but the point was made as the case has (finally) created some good legal authority for future cases against collectors. Under the FDCPA, it is against the law for a collection agency to place an excessive number of calls to anybody (not just the debtor) with the intent to "annoy abuse or harass" the person. However, FDCPA was not designed to stop creditors from collecting a debt. The only way to truly stop a creditor is through a Bankruptcy filing or a settlement with the creditor/collector.

Many attorneys representing collection agencies claim that that their collectors did not "intend" to harass, but were just trying to get in contact with a debtor. This is a convenient argument by collection and their attorneys. However, the recent Tenth Circuit has made it clear that juries can find a collector’s calls were harassing and, more importantly, were done with the intent to harass. Interestingly, an angle that the Tenth Circuit took that often hasn’t been look at is the actual ringing of the telephone. While many parties and courts focus on the number of calls, it seems apparent the Tenth Circuit though we should all focus on the ringing telephone itself. Even more importantly, the Tenth Circuit acknowledged that people these days often screen their calls, but that doesn’t make a collectors contestant calls, and continuously ringing telephone, any less harassing. Overall, it seems that even if a person knows who is calling, and the person is trying to avoid those calls, they can still be harassing and clearly they are unwanted (or else they would be answered). Further, it appears that the courts are seeing that when a collector’s calls go unanswered, the only reason for a collector to keep calling is to make the person so annoyed that they’ll answer and pay just to get the calls to stop. When that occurs, that is when a debt collector violates the FDCPA.

The FDCPA and the new rulings on this act are slowly beginning to help the American consumer. However, in the end, the best way to obtain peace of mind and to get rid of collectors and your debts is through the filing of Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.

Exemptions of Property in Bankrutpcy

2011-05-24T16:50:00.000-07:00

In this month's edition of ANH's Bankruptcy Blog, we will discuss property exemptions and the limitations on what can be exempted during the Bankruptcy process.

In California, you can discharge or modify your debts and still exempt or protect some of the equity in your home, your car and personal property from creditors when you file Bankruptcy. Overall, you may exempt a whole host of property that falls into one of the exemptions categories up to a certain dollar amount depending on the category. The amount you can exempt a certain property depends on the exemption limit applies to any equity you have in the property.

For our purposes, "exempting" a property means that you will be able to keep the exempted property after your Bankruptcy. Further, for our purposes "equity" means the difference between the value of a property and what is owed on said property. For example, a car valued at $5000 with a loan of $4500 has an equity value of only $500.

If your car is secured by a loan and you want to keep you car, the equity in your car is covered by your exemptions, and by electing to keep making payments on the loan you generally can keep this property through the bankruptcy. If all the equity is not covered by your exemptions, the US Trustee may elect to liquidate this asset and distribute the assets. Generally, you will be entitled to the value of your exemption in the asset as a cash payment. Meaning, even if the US Trustee sells your property, you will still be entitled to your exemption.

Overall, we at ANH Legal Group believe that it is important to be informed about your rights and the the limitation of the same to make an informed decision! For more information please contact our office to discuss all your bankruptcy options.

Debt Cancellation, Taxes and Bankruptcy!

2011-04-10T19:13:00.000-07:00

In this week's edition of ANH's Bankruptcy Blog, we will discuss Debt Cancellation and how such cancellations can cause your taxes to go up!

Overall, many consumers (i.e. taxpayers!) are unaware that the "cancellation or forgiveness of debt can be considered "taxable income" by the IRS. For example, if your lender agrees to forgive $50,000 of your mortgage through a short sale, your "taxable income" will technically increase by $50,000. However, things are much different if you have declared Bankruptcy and received a Discharge. Generally, a Debtor's Discharge of his debt has no tax consequences. The Internal Revenue Code § 108 excludes the discharge of debt in Bankruptcy from its definition of "cancellation of debt" income. Furthermore, a Debtor’s tax attributes, such as loss carry forwards and exclusion of gain on sale of a primary residence, as they exist before bankruptcy, pass to the Bankruptcy Estate and may be used or even exhausted by the Trustee in the administration of the estate.

Notwithstanding the above, we have assisted several former clients respond to Creditors whom issued a Form 1099-C to the IRS which has reported our former client's Discharged Debt as "debt forgiveness income." Form 1099-C is the Federal Tax form that Creditors must issue to both the Debtor and to the IRS in the event of a "Debt Cancellation". However, as per Internal Revenue Code § 108, debts Discharged in Bankruptcy are not taxable. If you have received an IRS 1099-C on a debt discharged in a bankruptcy case, you can file a response to the IRS by filing a Form 982. This IRS form advises the the IRS that the sum on the 1099-C should be excluded from your income by reason of your bankruptcy.

Overall, it is important to get professional tax advice before venturing into bankruptcy. It is even more important to obtain professional tax advise if you own (or owned) a small business or have a complicated economic past. For more information please contact our office to discuss all your bankruptcy options.

Loan Modifications and Foreclosures

2011-04-04T09:41:00.000-07:00

In this week's edition of ANH's Bankruptcy Blog, we will discuss loan modifications and how they are leading to foreclosures. In today's economy, virtually every person that is seeking Bankruptcy assistance has a "loan modification issue." It seems that everyone is being given the run around by the lenders for months and even years for a loan modification while their collection departments are waiting for an opportunity to take your home. The outright fraudulent practices of the banks are causing record foreclosures . Almost every week, we have to file an emergency bankruptcy petition for one of our clients to stop a foreclosure sale.

In the past year, the banks have set new home foreclosure records and new profit records!!! Many homeowners do not know that loan servicers make money by foreclosing on your home. Overall, these servicers have a financial incentive not to modify your loan and have an incentive to prolong the entire process as they get to charge more fees for "working on your submission". In reality, all they are doing is taking the American taxpayer for an unwanted joy ride. Unfortunately, President Obama has not put in place any mandatory laws for loan modification (despite all of the hype and showmanship) and the programs he has put out have conflicting "incentives" for the lenders to modify loans.

For example, Bank of America accepted more than $25 billion in government bailout monies but they are hardly modifying home loans. As per the terms of the bail-out, Bank of America, like other TARP-funded financial institutions, is obligated to offer alternatives to foreclosure and permanently reduce mortgage payments for eligible borrowers struck by financial hardship. This sounds good and sells well in a 30 second sound bite but the reality is far different. According to the recent lawsuits, Bank of America which services more than 1 million mortgages that qualify for financial relief, has granted only 12,761 permanent modifications.

In sum, the banks will tell you they have many programs to help homeowners when you call them. They will even send you big packages with all kinds of forms for various modification programs that they "offer." However, they look for any reason to deny you for each program they offer. While our office does not provide any loan modification services, we do help homeowners by stopping banks from foreclosing on your home. We can also develop an affordable repayment plan for you with no interest and penalty through the Chapter 13 process.

Please contact our office for more information. We offer a free consultation with one of our experienced attorneys.

Post-Bankruptcy Lease Obligations and a Debtor's Right to a Discharge

2011-03-25T10:55:00.000-07:00

Residential and other Leases:

In this week's edition of ANH's Bankruptcy Blog, we wish to discuss a new issue that seems to be coming up over and over again. This new trend relates to disputes between landlord and tenants whom are in Bankruptcy. Specifically, landlord claims for post petition rent monies from their tenants (Debtors). This new trend further shows that the bad state of the economy is now effecting even simple residential leases......

Overall, a simple residential lease is not so simple in Bankruptcy Court as an apartment lease is technically an "executory contract/lease" which needs to be addressed properly in your petition. Moreover the US Trustee needs to approve your lease which they commonly do (if you want it and can pay for it) but these days nothing is common anymore!

Under 11 U.S.C. §365(d)(1), the US Trustee has 60 days after your Bankruptcy filing to "assume or reject " any executory contracts or unexpired leases (such as an apartment lease). In virtually every Chapter 7 no-asset case, the residential lease is deemed rejected by the US Trustee unless the Debtor fulls assumes the lease by way of executing a reaffirmation agreement and paying timely payments. There is no other Bankruptcy Code provision that requires either the Debtor and the US Trustee to keep current on lease obligations (i.e. paying rent) arising during the post-petition/pre-rejection period. Also, pursuant to 11 U.S.C §365(g)(1), the Trustee's rejection of a lease is treated as a breach of the lease that took place immediately prior to the filing of the bankruptcy petition. See In re Lavigne, 114 F.3d 379, 387 (2d Cir.1997). Therefore, a landlord's claim for breach of a lease is deemed merely a part of its pre-petition rejection damages claim.

In sum, a landlord is entitled to damages for the breach, even damages arising after the rejection of the lease, but those damages are considered a pre-petition claim which usually amount to nothing! Its complicated for sure but the end result makes sense. In a typical consumer based Chapter 7 Bankruptcy matter, a Debtor is seeking a "fresh start" and the above does just that in a residential lease context. However, no two leases and two debtors are a like and these are complicated issues for sure so please don't try this at home!

Tax Refunds and Bankruptcy!

2011-03-14T15:01:00.000-07:00

One of the main goals of ANH Legal Group's Bankruptcy blog is to give our clients or potential clients insights into the latest trends in Bankruptcy. One of the newest trends in the world of insolvency is the use of tax refunds to pay for a Bankruptcy filing. This new and unfortunate trend is primarily related to the desire of hard working people to stop collection efforts against them, mainly to stop a car repossession.

Just another sign that this economical downturn is far from over!

For more information please visit our website: anhlegal.com.

Welcome to ANH Legal Group's Bankruptcy Blog!

2011-03-02T15:31:00.000-08:00

I am please to announce the inauguration of ANH Legal Group's Bankruptcy Blog. This blog will be dedicated to informing our clients about the latest trends in Bankruptcy and about the latest rulings/changes on important aspects of Bankruptcy laws. More importantly, this blog will allow our clients (and anyone else that wants) to interact with the attorneys in our office!

Information is power and we hope to impower you with knoweldge about your rights and your obligations in Bankruptcy through this blog. We welcome all comments and suggestions for improving this blog!