Another Auto Fraud Response. Yo Yo Set Up?

Q: I purchased a new Jeep and have not received financial information. The dealership is not responding. What action can I take?

I purchased a new Jeep  2 months ago. I have not received any information regarding my loan payments. The dealership made an error on the original contract and I was told I needed to sign a new contract and include my first payment. I have the signed contract of sale.

My Answer:

I would make payments according to the original agreement you have for now so as to not injure your credit. Straighten it out with your lender not the dealer. If it is favorable to you insist on keeping it.

The more important issue to my mind is is this actually an auto fraud YO YO Sale set up? Typically, the dishonest dealer will lure a buyer back into the dealership citing a mistake like this and then present you with a completely different deal, one much more favorable to the dealer than the first. If you do go in, do not bring the Jeep and do bring a friend with you, one who has backbone.

The dealer, that is, is “yo yo-ing” you back to the dealership to pressure you to rescind the contract and adopt a new one undoubtedly with a much higher rate of interest. The “basis” would be that the contract has to be revised anyway to remove the supposedly erroneous calculation. This is of course illegal since you already have a binding contract but most buyers don’t know it, assume the dealer is right and go along with everything.

You do not need to stand for any of this because you already have have signed papers and own the car, subject to making payments only, regardless of whether the vehicle has been financed or the dealer misstated the purchase price. A finance document showing payments, rebates, deposit, interest rate and other financial items is a binding contract, giving you specific legal rights under PA law. The dealer cannot change any of this legally once you have taken possession. The dealership is required to have a title issued to you.

See my article herein entitled “Y is for YO YO Sales” for additional information.

Auto Fraud Question Answered

Q:  Just signed papers on used car in Devon, Pa. End of day at closing time at a Mercedes-Benz dealer. 11/28/15.

Was advertised as certified & 1 owner. Was told it was bought new at this dealer & serviced throughout its life at this dealer. We were given the car fax report after signing the papers. Looked at the report & saw it wasn’t bought at this dealer. …

My Answer:

Without even referencing the lemon law or other laws regarding auto sales in PA, this is actionable common law fraud of a material nature. It is also in violation of the “catchall” clause of our state UDAP Statute. I believe I know this dealer as a quality operator generally and am very surprised at their behavior in this instance. Sounds to me like some renegade salesman trying desperately to make quota. Why material?  Because you 
indicate you would not have made the purchase had you known the truth about the car. 
Why fraud? Because untrue statements were knowingly made with the intention of causing reliance upon which you reasonably relied in making the purchase. They cooked their own goose by handing you the Carfax only AFTER you signed, showing clear intent to defraud. I would say you have the right to ask for compensation as the remedies for auto fraud can be quite severe (above and beyond actual damages) and can even include reasonable legal fees in a proper case!

Best of luck to you. 

ABC’s of Chapter 13 Lien Stripping

 

By Christopher C. Carr Esq., Chester County Bankruptcy Attorney (Contact info. Below)

OVERVIEW: The once obscure practice of lien stripping has more recently enabled thousands of homeowners to remove the liens of second and third mortgages forever, while paying only a small percentage of their face value. The result has been to grant a “new lease on life” to many homeowners which is after all the ultimate goal of bankruptcy.

WHAT IS A LIEN STRIP?

Lien Stripping refers to the practice permitted by 11 USC 1322(b), which provides that “wholly undersecured” (don’t worry, this term is explained below) liens against real property may be removed or “stripped,” and the debt to which they relate treated as unsecured in a Chapter 13 Plan of Reorganization. Liens may not be stripped in Chapter 7 cases. Lien stripping however has two distinct, and very desirable, benefits for qualifying Chapter 13 debtors:

(1) At the conclusion of the lien strip the underlying property is no longer be encumbered by the undersecured lien and that creditor cannot prevent the sale or refinancing of the real estate nor deduct anything from the proceeds payable to the seller; and

(2) Instead of having to pay the debt secured by that stripped lien in full, the debtor need only pay the same percentage of the claim as it plans to pay all unsecured creditors – often 10% or less plus applicable trustee fees.

FIRST MORTGAGES ONLY NEED APPLY. 

Lien stripping is permissible only for claims secured by the Debtor’s principal residence because a lien strip modifies the “total package of rights for which the claim holder bargained.”

 

CAN A PARTIAL LIEN STRIP WORK?

No. There is no such thing as a partial lien strip. Bankruptcy Courts everywhere, including the Eastern District of Pennsylvania where Chester County Bankruptcy Attorney Christopher C. Carr, Esq. primarily practices, will only allow a lien to be stripped if it is wholly “undersecured”: that is, the equity remaining after the first mortgage and all other liens on the property that are prior in interest is zero or negative. Since the majority view among the Federal circuits is that the term “undersecured” means that there is some equity to secure the lien, in order to be stripped liens must be wholly unsecured.

QUALIFYING FOR A LIEN STRIP

A lien strip can only be accomplished in the course of a confirmed Chapter 13 plan of reorganization. The practice of lien stripping refers to the splitting  of a secured interest in real or personal property into a secured and unsecured portion. The calculations behind lien stripping are simple:

V – D[- JD] ≤ $0

V: market value of a property

D: debt(s) encumbering that property

JD: Junior debt/TARGET debt (i.e. Second mortgage)

Repeat for each lien, adding “strippable” debt amounts to D. For example, add mortgage debt 2 and mortgage debt 1 to see if a lien strip for mortgage debt 3 is available.

In other words, for a lien to be stripped and the lien holder’s interest treated as unsecured, such that it receives far less than all its money plus interest, the value of the debtor’s property at the time of filing, less the fully-secured non-target debts, must be less than or equal to $0. In a rising real estate market, meeting these requirements used to be challenging, if not downright impossible. However, in market conditions such as those prevailing today where many homeowners are “underwater” as to their first mortgage and have a HELOC or second mortgage and/or even an additional mortgage in third position on top of that, the conditions necessary for a lien strip to take place are relatively straightforward and can sometimes be met without much resistance from the affected creditor, especially if there is a wide disparity between market price and first mortgage debt. [1]

STRIPPING THE LIEN – WHEN, WHERE, HOW, WHAT RESULT?

Federal Appellate circuits follow different approaches when it comes to lien stripping. Some Bankruptcy Courts, for instance, require no more than a listing in the debtor’s bankruptcy petition that bifurcates the creditor’s interest into secured and unsecured portions. Should the creditor fail to timely object, their lien is stripped virtually automatically.

On the other hand, other Courts, such as the Eastern District of Pennsylvania where Chester County Bankruptcy Attorney Christopher C. Carr, Esq. primarily practices, require that the debtor bring a motion to strip the lien. Again, if the creditor fails to respond its lien is stripped. Still other circuits, the most conservative ones, require the debtor to bring a separate adversary case against the creditor whose lien is to be stripped. Often the latter 2 kinds of situations – motions and adversary actions – become fiercely contested and require incredible amounts of preparation as well as costly expert testimony. This kind of attention and resources are required because it is the value of the underlying property that is typically in dispute. This suggests that prudent bankruptcy attorney not counsel his/her client to do a lien strip where there is a lack of solid evidence of a disparity in value vs. debt as this will only lead to litigating disputes over collateral valuation in the bankruptcy court which the bankruptcy client, already hard pressed can ill afford.  See for example: In re Heritage Highgate, Inc.,  Case No. 11-1889, 2012 U.S. App. LEXIS 9698 (3d Cir., May 14, 2012).

 

WHAT ABOUT TAXES?  Can they ALSO be stripped OR UTILISED?

Neither Federal nor State taxes can typically be discharged in bankruptcy and if real estate is sold or transferred following a Bankruptcy filing the taxes must still be paid – regardless of any lien strip action. So, no you cannot strip such taxes. But if properly engineered, the additional lien of unpaid property taxes can be used to create a viable lien strip where none would otherwise exist since they reduce the amount of equity in the debtor’s property.  With the addition of one additional variable the above formula above then becomes:

V – (D+PT)[-JD] ≤ $0   Where PT = property tax lien(s) value.

DO NOT TRY THIS AT HOME:

Since lien stripping can be a contentious area with minefields aplenty the reader is advised to consult an experienced lawyer such as Chester County Bankruptcy Attorney, Christopher C. Carr, Esq.

CONCLUSIONS

While not unrestricted and often misunderstood, lien strips can, and ought to be used to the great advantage of Chapter 13 debtors in the proper circumstances. This will be the case so long as property values continue to be depressed and debtors find themselves squeezed between escalating obligations and dwindling home values.

cCc

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified legal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  


©Christopher C. Carr, Attorney at Law 2009, 2014, All Rights Reserved.


[1] As with so many other bankruptcy concepts, it seems counterintuitive but our Debtor may ultimately be unable to strip the lien of a second mortgage debt because he/she thought they were doing the right thing by conscientiously paying their first mortgage every month. Maybe had they instead spent that money in Aruba or Vegas (LOL) and let the mortgage go into arrears status and the interest, unpaid escrows and penalties build up over time, the increase would perhaps have been sufficient to absorb a higher market price.

Chapter 13 Lien Strip A to Z

By Christopher C. Carr Esq., Chester County Bankruptcy Attorney (Contact info. Below)

OVERVIEW: The once obscure practice of lien stripping has more recently enabled thousands of homeowners to remove the liens of second and third mortgages forever, while paying only a small percentage of their face value. The result has been to grant a “new lease on life” to many homeowners which is after all the ultimate goal of bankruptcy.

WHAT IS A LIEN STRIP?

Lien Stripping refers to the practice permitted by 11 USC 1322(b), which provides that “wholly undersecured” (don’t worry, this term is explained below) liens against real property may be removed or “stripped,” and the debt to which they relate treated as unsecured in a Chapter 13 Plan of Reorganization. Liens may not be stripped in Chapter 7 cases. Lien stripping however has two distinct, and very desirable, benefits for qualifying Chapter 13 debtors:

(1) At the conclusion of the lien strip the underlying property is no longer be encumbered by the undersecured lien and that creditor cannot prevent the sale or refinancing of the real estate nor deduct anything from the proceeds payable to the seller; and

(2) Instead of having to pay the debt secured by that stripped lien in full, the debtor need only pay the same percentage of the claim as it plans to pay all unsecured creditors – often 10% or less plus applicable trustee fees.

FIRST MORTGAGES ONLY NEED APPLY. 

Lien stripping is permissible only for claims secured by the Debtor’s principal residence because a lien strip modifies the “total package of rights for which the claim holder bargained.”

 

CAN A PARTIAL LIEN STRIP WORK?

No. There is no such thing as a partial lien strip. Bankruptcy Courts everywhere, including the Eastern District of Pennsylvania where Chester County Bankruptcy Attorney Christopher C. Carr, Esq. primarily practices, will only allow a lien to be stripped if it is wholly “undersecured”: that is, the equity remaining after the first mortgage and all other liens on the property that are prior in interest is zero or negative. Since the majority view among the Federal circuits is that the term “undersecured” means that there is some equity to secure the lien, in order to be stripped liens must be wholly unsecured.

QUALIFYING FOR A LIEN STRIP

A lien strip can only be accomplished in the course of a confirmed Chapter 13 plan of reorganization. The practice of lien stripping refers to bifurcation of a secured interest in real or personal property into a secured and unsecured portion. The calculations behind lien stripping are simple:

V – D[- JD] ≤ $0

V: market value of a property

D: debt(s) encumbering that property

JD: Junior debt/TARGET debt (i.e. Second mortgage)

Repeat for each lien, adding “strippable” debt amounts to D. For example, add mortgage debt 2 and mortgage debt 1 to see if a lien strip for mortgage debt 3 is available.

In other words, for a lien to be stripped and the lien holder’s interest treated as unsecured, such that it receives far less than all its money plus interest, the value of the debtor’s property at the time of filing, less the fully-secured non-target debts, must be less than or equal to $0. In a rising real estate market, meeting these requirements used to be challenging, if not downright impossible. However, in market conditions such as those prevailing today where many homeowners are “underwater” as to their first mortgage and have a HELOC or second mortgage and/or even an additional mortgage in third position on top of that, the conditions necessary for a lien strip to take place are relatively straightforward and can sometimes be met without much resistance from the affected creditor, especially if there is a wide disparity between market price and first mortgage debt. [1]

STRIPPING THE LIEN – WHEN, WHERE, HOW, WHAT RESULT?

Federal Appellate circuits follow different approaches when it comes to lien stripping. Some Bankruptcy Courts, for instance, require no more than a listing in the debtor’s bankruptcy petition that bifurcates the creditor’s interest into secured and unsecured portions. Should the creditor fail to timely object, their lien is stripped virtually automatically.

On the other hand, other Courts, such as the Eastern District of Pennsylvania where Chester County Bankruptcy Attorney Christopher C. Carr, Esq. primarily practices, require that the debtor bring a motion to strip the lien. Again, if the creditor fails to respond its lien is stripped. Still other circuits, the most conservative ones, require the debtor to bring a separate adversary case against the creditor whose lien is to be stripped. Often the latter 2 kinds of situations – motions and adversary actions – become fiercely contested and require incredible amounts of preparation as well as costly expert testimony. This kind of attention and resources are required because it is the value of the underlying property that is typically in dispute. This suggests that prudent bankruptcy attorney not counsel his/her client to do a lien strip where there is a lack of solid evidence of a disparity in value vs. debt as this will only lead to litigating disputes over collateral valuation in the bankruptcy court which the bankruptcy client, already hard pressed can ill afford.  See for example: In re Heritage Highgate, Inc.,  Case No. 11-1889, 2012 U.S. App. LEXIS 9698 (3d Cir., May 14, 2012).

 

WHAT ABOUT TAXES?  Can they ALSO be stripped OR UTILISED?

Neither Federal nor State taxes can typically be discharged in bankruptcy and if real estate is sold or transferred following a Bankruptcy filing the taxes must still be paid – regardless of any lien strip action. So, no you cannot strip such taxes. But if properly engineered, the additional lien of unpaid property taxes can be used to create a viable lien strip where none would otherwise exist since they reduce the amount of equity in the debtor’s property.  With the addition of one additional variable the above formula above then becomes:

V – (D+PT)[-JD] ≤ $0   Where PT = property tax lien(s) value.

DO NOT TRY THIS AT HOME:

Since lien stripping can be a contentious area with minefields aplenty the reader is advised to consult an experienced lawyer such as Chester County Bankruptcy Attorney, Christopher C. Carr, Esq.

CONCLUSIONS

While not unrestricted and often misunderstood, lien strips can, and ought to be used to the great advantage of Chapter 13 debtors in the proper circumstances. This will be the case so long as property values continue to be depressed and debtors find themselves squeezed between escalating obligations and dwindling home values.

cCc

Law Offices of Christopher C. Carr, MBA,  P.C., a quality Chester County Bankruptcy Practice, is located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Carr concentrates his practice on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield, Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Oxford, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester, Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!

 

©Christopher C. Carr, Attorney at Law 2009, 2014, All Rights Reserved.


[1] As with so many other bankruptcy concepts, it seems counterintuitive but our Debtor may ultimately be unable to strip the lien of a second mortgage debt because he/she thought they were doing the right thing by conscientiously paying their first mortgage every month. Maybe had they instead spent that money in Aruba or Vegas (LOL) and let the mortgage go into arrears status and the interest, unpaid escrows and penalties build up over time, the increase would perhaps have been sufficient to absorb a higher market price.

By Christopher C. Carr Esq., Chester County Bankruptcy Attorney (Contact info. Below)

OVERVIEW: The once obscure practice of lien stripping has more recently enabled thousands of homeowners to remove the liens of second and third mortgages forever, while paying only a small percentage of their face value. The result has been to grant a “new lease on life” to many homeowners which is after all the ultimate goal of bankruptcy.

WHAT IS A LIEN STRIP?

Lien Stripping refers to the practice permitted by 11 USC 1322(b), which provides that “wholly undersecured” (don’t worry, this term is explained below) liens against real property may be removed or “stripped,” and the debt to which they relate treated as unsecured in a Chapter 13 Plan of Reorganization. Liens may not be stripped in Chapter 7 cases. Lien stripping however has two distinct, and very desirable, benefits for qualifying Chapter 13 debtors:

(1) At the conclusion of the lien strip the underlying property is no longer be encumbered by the undersecured lien and that creditor cannot prevent the sale or refinancing of the real estate nor deduct anything from the proceeds payable to the seller; and

(2) Instead of having to pay the debt secured by that stripped lien in full, the debtor need only pay the same percentage of the claim as it plans to pay all unsecured creditors – often 10% or less plus applicable trustee fees.

FIRST MORTGAGES ONLY NEED APPLY. 

Lien stripping is permissible only for claims secured by the Debtor’s principal residence because a lien strip modifies the “total package of rights for which the claim holder bargained.”

 

CAN A PARTIAL LIEN STRIP WORK?

No. There is no such thing as a partial lien strip. Bankruptcy Courts everywhere, including the Eastern District of Pennsylvania where Chester County Bankruptcy Attorney Christopher C. Carr, Esq. primarily practices, will only allow a lien to be stripped if it is wholly “undersecured”: that is, the equity remaining after the first mortgage and all other liens on the property that are prior in interest is zero or negative. Since the majority view among the Federal circuits is that the term “undersecured” means that there is some equity to secure the lien, in order to be stripped liens must be wholly unsecured.

QUALIFYING FOR A LIEN STRIP

A lien strip can only be accomplished in the course of a confirmed Chapter 13 plan of reorganization. The practice of lien stripping refers to bifurcation of a secured interest in real or personal property into a secured and unsecured portion. The calculations behind lien stripping are simple:

V – D[- JD] ≤ $0

V: market value of a property

D: debt(s) encumbering that property

JD: Junior debt/TARGET debt (i.e. Second mortgage)

Repeat for each lien, adding “strippable” debt amounts to D. For example, add mortgage debt 2 and mortgage debt 1 to see if a lien strip for mortgage debt 3 is available.

In other words, for a lien to be stripped and the lien holder’s interest treated as unsecured, such that it receives far less than all its money plus interest, the value of the debtor’s property at the time of filing, less the fully-secured non-target debts, must be less than or equal to $0. In a rising real estate market, meeting these requirements used to be challenging, if not downright impossible. However, in market conditions such as those prevailing today where many homeowners are “underwater” as to their first mortgage and have a HELOC or second mortgage and/or even an additional mortgage in third position on top of that, the conditions necessary for a lien strip to take place are relatively straightforward and can sometimes be met without much resistance from the affected creditor, especially if there is a wide disparity between market price and first mortgage debt. [1]

STRIPPING THE LIEN – WHEN, WHERE, HOW, WHAT RESULT?

Federal Appellate circuits follow different approaches when it comes to lien stripping. Some Bankruptcy Courts, for instance, require no more than a listing in the debtor’s bankruptcy petition that bifurcates the creditor’s interest into secured and unsecured portions. Should the creditor fail to timely object, their lien is stripped virtually automatically.

On the other hand, other Courts, such as the Eastern District of Pennsylvania where Chester County Bankruptcy Attorney Christopher C. Carr, Esq. primarily practices, require that the debtor bring a motion to strip the lien. Again, if the creditor fails to respond its lien is stripped. Still other circuits, the most conservative ones, require the debtor to bring a separate adversary case against the creditor whose lien is to be stripped. Often the latter 2 kinds of situations – motions and adversary actions – become fiercely contested and require incredible amounts of preparation as well as costly expert testimony. This kind of attention and resources are required because it is the value of the underlying property that is typically in dispute. This suggests that prudent bankruptcy attorney not counsel his/her client to do a lien strip where there is a lack of solid evidence of a disparity in value vs. debt as this will only lead to litigating disputes over collateral valuation in the bankruptcy court which the bankruptcy client, already hard pressed can ill afford.  See for example: In re Heritage Highgate, Inc.,  Case No. 11-1889, 2012 U.S. App. LEXIS 9698 (3d Cir., May 14, 2012).

 

WHAT ABOUT TAXES?  Can they ALSO be stripped OR UTILISED?

Neither Federal nor State taxes can typically be discharged in bankruptcy and if real estate is sold or transferred following a Bankruptcy filing the taxes must still be paid – regardless of any lien strip action. So, no you cannot strip such taxes. But if properly engineered, the additional lien of unpaid property taxes can be used to create a viable lien strip where none would otherwise exist since they reduce the amount of equity in the debtor’s property.  With the addition of one additional variable the above formula above then becomes:

V – (D+PT)[-JD] ≤ $0   Where PT = property tax lien(s) value.

DO NOT TRY THIS AT HOME:

Since lien stripping can be a contentious area with minefields aplenty the reader is advised to consult an experienced lawyer such as Chester County Bankruptcy Attorney, Christopher C. Carr, Esq.

CONCLUSIONS

While not unrestricted and often misunderstood, lien strips can, and ought to be used to the great advantage of Chapter 13 debtors in the proper circumstances. This will be the case so long as property values continue to be depressed and debtors find themselves squeezed between escalating obligations and dwindling home values.

cCc

Law Offices of Christopher C. Carr, MBA,  P.C., a quality Chester County Bankruptcy Practice, is located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Carr concentrates his practice on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield, Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Oxford, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester, Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!

 

©Christopher C. Carr, Attorney at Law 2009, 2014, All Rights Reserved.


[1] As with so many other bankruptcy concepts, it seems counterintuitive but our Debtor may ultimately be unable to strip the lien of a second mortgage debt because he/she thought they were doing the right thing by conscientiously paying their first mortgage every month. Maybe had they instead spent that money in Aruba or Vegas (LOL) and let the mortgage go into arrears status and the interest, unpaid escrows and penalties build up over time, the increase would perhaps have been sufficient to absorb a higher market price.

HOW TO SUCCEED WITH YOUR MORTGAGE MOD USING A CHAPTER 13 BANKRUPTCY MORTGAGE MODIFICATION MEDIATION PROGRAM

By Christopher C. Carr, Esq., Chester County Bankruptcy Lawyer Tel: 610-380-7969 Email: cccarresq@aol.com contact-form][contact-field label='Name' type='name' required='1'/][contact-field label='Email' type='email' required='1'/][contact-field label='Website' type='url'/][contact-field label='Comment' type='textarea' required='1'/][/contact-form] ASSET PROTECTION AND HOME RESCUE USING  USING A CHAPTER 13 BANKRUPTCY MORTGAGE MODIFICATION MEDIATION PROGRAM . I am admitted to practice in the Middle District of Pennsylvania, which recently instituted a CHAPTER 13 BANKRUPTCY MORTGAGE MODIFICATION MEDIATION PROGRAM. These court sanctioned programs (not available in all jurisdictions) have been demonstrated to work where HAMP does not.   Why?  Because, under Federal Law, if a bankruptcy judge orders parties to be referred to mediation, the parties are legally bound to mediate in good faith.  This legal duty to act in good faith does not exist in many state courts, including Pennsylvania.  This means that in state court, a mortgage company doesn’t have to justify denying your modification, and it can lie about not getting proper documentation (when it did) or your failing the results of its underwriting analysis (when you actually qualify). Underwriters for the loan servicers are the ones who actually decide whether or not to grant a modification to a customer.  Outside of bankruptcy, underwriters routinely say, “No,” no reason is or needs be given.  The truth is that mortgage companies do not want to modify your mortgage.  They are in the business of making mortgages not remaking them. In bankruptcy court, in contrast to state court, “good faith” requires the mortgage servicer to provide a bona fide reason to deny a mortgage modification, and in reality, they can almost never come up with an honest reason to turn down a homeowner.  Thus, they will, if begrudgingly, say, “Yes” for fear of sanctions. Can a mortgage servicer really be sanctioned for denying a mortgage mod?  Sure thing and they can be jaw droppers!  For example, recently, in Florida (another state with bankruptcy mediation), Homeward Residential, a national mortgage servicing company, failed to act in good faith during the mediation process.  It was ordered  by a local bankruptcy judge to pay more than $18,000 in punitive damages, sanctions and debtor’s attorney fees virtually immediately  for failing to act in good faith.  See Sanctions Order against Homeward Residential! Furthermore, these programs unlike HAMP generally do not have an income cutoff component so they can be used by higher income families to protect their assets using bankruptcy. There is no “Means” test for a 13.  And contrary to popular belief you don’t have to be bankrupt (penniless) to file a chapter 13 bankruptcy…you just have to meet certain limitations on maximum secured and unsecured debt. So, stop begging your mortgage servicer for a loan modification, only to get turned down.  If you live within the confines of the MDPA on call me at 610-380-7969 for a FREE consultation me and ask about the Chapter 13 Mortgage Modification Mediation Program instead.

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality  bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  


Not Legal Advice.

©Christopher C. Carr, Attorney at Law 2013, All Rights Reserved.

Credit being Properly Reported AFTER Bankruptcy? How to Find Out.

By Christopher C. Carr, Esq., Chester County Bankruptcy Lawyer,  After your Chapter 7 or 13 Bankruptcy Case is discharged, you will receive an Order of Discharge from the Courts in the mail. However, That does not mean that your credit is being properly reported to/by the credit bureaus.  Fixing any errors is up to you.  Here are the steps:

  1. 60-90 days after you receive the discharge, you should call the number provided on the www.annualcreditreport.com site and order your credit reports.  (Consumers are entitled to a free credit report every year or sooner when a negative decision is made by a creditor relying on a credit report.) You will see an option to download the report or to view it on the internet.  You should request your report be mailed to you by each of the three credit reporting agencies EquifaxExperian, and Transunion.   If you are married and filed a joint bankruptcy, both of the spouses must request their own reports.  There are many websites that will claim to be “free” but will typically start assessing a monthly fee after a trial period…don’t fall for it: www.annualcredi treport.com is the only such site authorized by federal law to provide truly free reports.
  2. You will also want to get additional reports from Telecheck, Early Warning Services, and Chexsystem if you have ever had a problem with a checking account or overdrafts.  These are the agencies that banks and credit unions rely on when the bank or credit union is making a decision about whether you can open an account with them.
  3. So, you are now up to six different reports and if married multiply this by 2.  However the review you will need to do is actually rather straightforward.  Look for a line under each of the creditors that indicates whether a balance is due.  That balance should read ZERO (unless it is a debt that is not dischargeable by law, like court ordered support, taxes, criminal fines or penalties).  There may or may not be a line saying “Chapter 7 Bankruptcy” or “Chapter 13 Bankruptcy”.  These statements refer to the reason why it is no longer a debt.
  4. If any of your creditors is still listing a balance, then the next step is to dispute the report of that creditor.  The Federal Trade Commission offers a sample dispute letter to consumers.  The sample is here.   You may alternatively use the form supplied with the report (usually found near the end of the report.)  Also send a copy of the letter to the creditor who is reporting inaccurate information.   And please, make and retain in your files two extra copies (one for your file and one for your attorney). Note that if more than one entity is reporting the debt improperly, they each must be notified separately.
  5. When a consumer disputes a credit report, the agency by law must investigate.  The creditor can either verify the accuracy, update or remove the information.   The credit reporting agency has deadlines for their response to the consumer. Generally the wrongly reported debt will now be off your report.
  6. However, if a creditor verifies the report (that is, wrongfully indicates the money is still due and owing), you should seek legal advice promptly. This is likely a violation of the discharge order of the bankruptcy court. There may also be a Fair Credit Reporting Act violation.  Your lawyer may suggest a lawsuit against the original creditor, the debt collector (if applicable) and/or the credit reporting agency.  Only a lawyer experienced in these kinds of cases can properly evaluate the situation and provide advice about your options.
  7. Just to make sure your credit is being reported correctly you may want to order your reports again in a year or whenever you are again eligible for a free report from www.annualcredi treport.com. Repeat the process above as needed.

Summary:

  1. Order your credit reports 60-80 days after your Order of Discharge
  2. Order additional reports for problem with checking account or overdrafts
  3. Carefully review  your credit reports
  4. Dispute any balances that are no longer owed with both the original creditor and the credit reporting agency.
  5. Review  responses promptly
  6. If the response says you still owe the debt, seek legal advice from an experienced attorney.
  7. Repeat in a year

This is but one of several steps I recommend you take after your bankruptcy is concluded.  For other actions you should take,  see my blog here 

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

 

K is for “Knight in Shining Armor”

Knight1 form Pranavian

By Christopher C. Carr, Esq. Chester County bankruptcy attorney. Tel: 610-380-7969 Email: cccarresq@aol.com Web: westchesterbankruptcyattorney.org

  It is simply AMAZING what a good bankruptcy lawyer can accomplish for you. In perhaps no other sector of the law are we attorneys handed a SWORD with which we can in a single blow, release the chains that bind our clients to the downward spiral of debt and a SHIELD with which to protect our clients against their predators (oops, I meant creditors).

Just look at what this mighty power we weild allows competent and compassionate counsel to do for you:

Eliminate Debt:

Credit Cards

Medical Bills

Liens and Judgments

Retain Assets:

Your Home

Retirement Accounts

Your Vehicles

Stop/Prevent:

Foreclosure/Repossession

Wage Garnishments

Creditor Harassment

Utility Shut Offs

Loss of Rental Unit

Reduce/Restructure/Strip Off:

Second & Beyond Mortgages

Late Model Vehicle Loans

& even retain for you or restore to you your very liberty, they even sometimes can keep you out of jail.

But BEWARE: of the novice, unskilled lawyer or the cut rate lawyer who “only does Chapter 7 bankruptcies”.  These types, through ignorance or lack of concern, will simply not be equipped to wield that sword and shield to fashion the relief that you need.  You need an EXPERIENCED FULL SERVICE CONSUMER BANKRUPTCY EXPERT to advise you and most importantly what your OPTIONS are and to help you to plan so that you can optimize your bankruptcy.

And where does this incredible power that we wield come from? Well, our forefathers, many of whom who had seen or even experienced firsthand the evils of the European debtor’s prisons, considered it a fundamental underlayment of the freedoms that we all enjoy that in times of need a “fresh start” could be obtained. So they instituted for all of the people of our great nation within the United States Constitution[1] the rights and protections of the bankruptcy clause!

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

I also provide Mortgage Modification Services.

Other Attorneys Blogging on the Letter K Include: See Comments Below.

©Christopher C. Carr, Attorney at Law, 2012, All Rights Reserved.  See Disclaimers.


[1] Article 1, Section 8, Clause 4

“W” is for Wages are not always safe from creditors in Pennsylvania

By Christopher C. Carr, Esq. Chester County bankruptcy attorney. Tel: 610-380-7969 Email: cccarresq@aol.com Web: westchesterbankruptcyattorney.org

Single W by CarbonNYC age garnishment is not legal in Pennsylvania. So your paycheck is safe and sound, right?

Your employer has just deposited your paycheck into your bank account and you write a check to pay your mortgage, “knowing” there is now plenty of money in there to cover it and nobody can get it. But the check comes back “NSF”. It bounced and for the life of you, you cannot figure out why!  But then there’s that innocent little check you cashed a while back for $1.19 and now it’s coming back to haunt you. Read on to see what happened…

Well, while your wages may be safe from direct garnishment this may be cold comfort indeed because, your bank accounts are not protected in this way.  In Pennsylvania, a bank account levy is allowed under Section 9607 – Title 13 – COMMERCIAL CODE  only after judgment is awarded.  But once armed with a judgment your creditors can take your entire bank account – if they can find it. If a legal judgment has been entered against you in Pennsylvania, the holder of that judgment can satisfy it in whole or in part with money in your bank accounts simply by obtaining a court order against your bank.

And how can creditors gain access to this information in this day and age of “privacy protection”? Well one way is through you via what is called “discovery in aid of execution”.  That is, under the PA Rules of Civil Procedure you can be required by subpoena to submit to questioning under oath regarding your assets and accounts.

But most collectors cannot be bothered to go through proper legal channels…that costs legal time and money. Instead they will resort to various underhanded schemes to find your accounts. One of the most successful routines they use is to trick debtors into cashing small checks they send them, say, for $1.19 (see above).  Accompanying the check will be a fake letter saying “we made an error in your account in your favor and so here’s $1.19 back”. When you cash the check the collector will see a copy of it in his bank statement and he can tell exactly where you do your banking.  That is enough to allow him to get what is called a “Seizure Order” against that bank. You may never even figure out how he got you but for a mere $1.19 (which he just tacks back onto your account) he typically seizes several hundred dollars. (The typical collector’s commission is between 40-50% of every dollar he collects.) The lesson is simple – don’t cash small checks your creditors send you.

Here is another far more important lesson: If you get served with a debt complaint, you definitely want to get a lawyer involved right away not only because not only can he defend you against it (either with a bankruptcy filing or outside bankruptcy) but also because a creditor judgment (that’s the key word of this blog if you haven’t guessed) can ALSO result in a lien against your home which will have to be satisfied before you can sell, whether or not you later go bankrupt. See my blog on the complex topic of Liens.

Now back to the exciting conclusion of this blog: except for a few minor exceptions such as the Commonwealth’s  statutory exemptions and payments received from Social Security, the entirety of all of your bank accounts may be subject to garnishment by a creditor who has obtained a judgment against you. And this applies to your hard earned wages as well, once they have been paid to you, as they become available to garnishment once they are on deposit in your personal checking account.It is important to recognize (i) that this is not a one shot deal, it can happen again and again until the debt is satisfied and (ii) that the one sure way to protect your bank accounts and the wages on deposit in them is to avail oneself of the automatic stay in bankruptcy to protect your assets. The stay is one really important reason why people in financial distress opt to seek the protection of the bankruptcy court!

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

 

I also provide Mortgage Modification Services.

Other attorneys playing the bankruptcy alphabet game:

  1. Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell
  2. Bay Area Bankruptcy Lawyer Cathy Moran
  3. Northern Ohio Lawyer Bill Balena
  4. Jay Fleischman New York Bankruptcy Lawyer

©Christopher C. Carr, Attorney at Law, 2012, All Rights Reserved.  See Disclaimers.