WHICH WAY TO GO — BANKRUPTCY OR LAWSUIT

EDITOR’S COMMENT: There is no easy answer to this question. Each area of the country is different, and even the Judges in the same district are different. When lawyers call and ask me this question my usual answer is that Max Gardner is probably right — that generally speaking Bankruptcy Court is a better place to be — if the client actually qualifies. The reason is that the Judges and Trustees in Bankruptcy court are accustomed — day in and ay out — in analyzing the priority and validity of claims.

Whatever you choose to do, it is essential that you have enough data that can be introduced or proffered as admissible evidence to support your position when you challenge their status as creditors, their standing etc. Whether someone is underwater or in the middle of a foreclosure attempt, the starting point is to get the COMBO (see above) — a report that details the issues in the title chain and documents combined with a report that analyzes the impact of the securitization trail — and how that diverges from actual monetary transactions. Remember the money trail most often does not even bear a resemblance to the documentary trail in most instances.

That said, there are places where the Bankruptcy Judges have not caught up with the reality of the fraudulent foreclosures. In those cases, you MIGHT be better off in State Court and fight the removal with a motion for remand. For laymen reading this it all boils down to this — check with local counsel licensed in the jurisdiction in which your property is located. They know who the Judges are and what they are doing.

My suggestions to attorneys usual include an admonition against admitting things that you later want to challenge. So if you list the house as an asset with a defined value and then list a creditor as having a secured interest whose claim is more than the asset, then you are admitting many things that you later want to challenge.

First, you don’t know what the house is worth for sure, especially to the homeowner considering the competing claims of creditors. So presumptions about the absence of any equity in the property will arise if you list the property in a conventional way, which is what the computer programs for BKR automatically do. This will diminish your argument regarding their inevitable motion to lift stay.

So I usually suggest to lawyers that they take a more aggressive stance — showing the home, but leaving the value as unknown. Second that they show the creditors — all of them, and show them as unsecured because of your position that they have no rightful claim to the loan or property.

Also, when the client has received multiple letters from different entities, the usual ploy is that the  banks and servicers pick one of them and use that entity to petition the court to lift the automatic stay. You can avert that or at least put it in issue if you list all creditors who have ever stated a claim to the property and even filing a proof of claim for those creditors that did not file the proof of claim. Failing to object to a proof of claim can sometimes be fatal to your strategy, so remember to do that.

The article below I picked up from the internet. It is more of an advertisement than an article but it contains some basics that are worthwhile knowing.

Have A Bankruptcy Attorney Protect Your Home From Foreclosure

SEE FULL ARTICLE ON FILINGBANKRUPTCYNOW.COM

Since the economic meltdown back in 2008, many Americans have been losing their houses to foreclosure and having to file for bankruptcy. People bought houses at inflated prices with a loan that they couldn’t afford. Many of these folks were lured in by teaser rates so they can afford the mortgage payment, while being told that they could just sell the property if they couldn’t make the payment when it adjusted. Everyone knows how the story ended with millions of people losing their homes to foreclosure. Many aggressive lenders stuck a knife in these debtors backs by going after the beaten-down consumer with a lawsuit for the deficiency or a IRS form 1099C making the debtor responsible for taxes on the deficiency. Basically, filing bankruptcy is the only way out of this problem for these individuals. Filing for bankruptcy will eliminate all the liability from a short sale or a foreclosure.

Recently, it was reported on RealtyTrack that there is 4 million US homes in the pipeline for foreclosure in 2012. Last year, different real estate agencies were reporting that we will see a rebound in the real estate market in 2012. Last week, it came out that the numbers for home sales were improperly reported, where they actually counted an escrow and sale as two transactions, virtually doubling the amount of home sales for the year. This blows apart the theory that the economy is rebounding and housing prices are on their way back up. People that are hanging on trying to juggle their credit card bills along with their mortgages until the market comes back, might want to reconsider filing bankruptcy. Using a bankruptcy filing can help in stopping foreclosure. A bankruptcy attorney can help an individual make the proper decisions to get out of debt and protect the family home. Many individuals find out that after filing Chapter 7 bankruptcy and wiping out all their unsecured debt, they have enough money left over to be able to make the mortgage payment and keep their house out of foreclosure. Before it’s too late, everyone in this situation should consider seeking the advice from a bankruptcy attorney. Most attorneys offer free consultations, so you can’t use the excuse that you don’t have the money to spend. In today’s unstable economy, being proactive with your finances will help protect your family’s financial future.