As a condition to getting a loan, a business is usually required to offer up assets as "security" (or "collateral"). The borrower signs a security agreement giving the lender the power to foreclose on the assets if the business defaults on the loan.
Examples of business assets in which lenders will take a security interest include:
* Personal property:
o Equipment
o Vehicles
o Office furnishings
o Inventory and proceeds from sales
o Accounts receivable
o Stocks
o Crops
o Patents, copyrights, trademarks and other intellectual property rights
o "Choses in action" ( potential rights that have not yet matured, such as a claim in a lawsuit)
* Real property:
o Commercial real estate
o Interests in leases
o Options to purchase
* Fixtures (improvements such as built-in cabinets that started out as personal property before becoming a part of real property)
Depending on the type of asset, there are different requirements for creating a security interest. With personal property, for example, the security agreement itself may be enough to create a security interest in collateral that is described in the agreement. Rules vary greatly from state to state.
In a business setting, a lender will want its security interest to have priority over other creditors.
With personal property, the lender files what"s called a "UCC-1 form" with the Secretary of State in the state where the collateral is located (and sometimes with local counties or townships, as well). This public record puts other creditors on notice that there is a lien on the assets that will have priority over any other security interests given on the same collateral.
With real property, lenders will insist on a mortgage or a deed of trust. The lender records this document in the county or township where the real property is located. In most cases, the first document to be recorded has priority over documents that are recorded later.
http://debtor-creditor.lawyers.com/creditors-rights/Security-Interests---The-Basics.html
Thursday, October 11, 2007
Small Business Bankruptcy Relief
Your business is in financial trouble. How do you figure out whether bankruptcy is necessary or helpful for your situation? Ask yourself the following questions:
Is the business a corporation, partnership or proprietorship?
Corporations and partnerships are legal entities separate from their shareholders or partners, and can file Chapter 7 or Chapter 11 bankruptcy in their own right.
But be aware that in a partnership’s Chapter 7 bankruptcy, the trustee can sue the general partners of the partnership if the partnership’s assets are insufficient to pay partnership debts. As a result, partners may be facing a suit by a well-funded trustee suing for the benefit of all creditors of the partnership.
Get good advice before contemplating a partnership bankruptcy.
Proprietorships are just an extension of the owner and can’t file bankruptcy alone. The proprietor must file the bankruptcy, as the property and debts of the business are really just one form of assets owned by the proprietor. The individual owner may file a Chapter 7, Chapter 11 or Chapter 13 bankruptcy (if the debt limits are met).
Should the business be reorganized or liquidated?
To answer this question, you have to know what has caused the problems the business now faces and the prospects for change.
Reorganization can’t create a market, increase gross revenue or make up for a poor fit between the skills that are available and the skills that are required to run the business. But reorganization can:
* Free up cash from paying old debt to finance current operations
* Make it easier to reject leases or contracts that are no longer advantageous (like an expensive facility lease or unfortunate equipment purchase)
* Prevent the loss of vital assets or cash to creditor collection actions.
In between Chapter 7 liquidation and reorganization, a Chapter 13 or Chapter 11 bankruptcy could provide breathing space for you to sell the business as a going concern or jettison assets in something other than a fire sale. The resulting profit (called “proceeds”) could pay taxes or unpaid salaries. Selling the business could mean ongoing jobs for your work force under new ownership. The bankruptcy could then be converted to a Chapter 7 bankruptcy, or dismissed if bankruptcy protection is no longer needed. The court will probably make you pay creditors from sale profits in order to get the bankruptcy case dismissed.
How much of the business debt is “secured”?
The division of debt between “secured” and “unsecured” guides what reorganization can do for your business. “Secured debt” is a creditor’s claim that is secured by a lien of some type in your property, either by your agreement or involuntarily, such as with a court judgment or taxes.
Purchase money security interests (a security interest the seller of goods takes at the time the goods are purchased) can be avoided or “stripped down” to the current value of the purchased goods in Chapter 11 and 13 bankruptcies. Creditors with purchase money security interests in goods with lower value almost never file a lawsuit to enforce their interest in the goods.
In bankruptcy planning, it’s important to know if judgment liens have been “perfected” (recorded with the right governmental agency), as secured debts are totaled separately from unsecured debts in calculating your eligibility for Chapter 13 bankruptcy. With a Chapter 13 proceeding, these debts can be “stripped down” to the value of the assets to which the lien attaches.
Recording a tax lien gives a creditor a lien on all of the taxpayer’s real estate and personal property. It can be eliminated in Chapter 13 bankruptcy if there isn’t any equity in the property. But tax liens can even reach retirement savings and 401(k) plans that are beyond the grasp of other creditors.
In most secured bank or SBA loans, the borrower gives the lender a security interest in all the borrower’s personal property. This is called a “blanket security interest” because the lien “blankets” all the borrower’s assets. (“Personal” here means everything but real estate, not “personal” as opposed to “business” assets.) Even things like accounts receivable and intellectual property can be covered by a blanket security interest. The agreement may also give the creditor a lien in assets purchased after the security agreement is signed.
In Chapter 11 or Chapter 13 bankruptcies, the lien may be “stripped down” to the value of the property at the time the bankruptcy is filed. Since a lender has rights in the items themselves and in any profit from their sale, you may not be free to sell the asset and pocket the profits, or even use the profits to pay other business debts. Spending the profits without the lender’s permission may be a form of fraud, creating a debt you can’t rid yourself of in bankruptcy.
Does management have the resources and desire to engage in the reorganization process?
Bankruptcy reorganization in Chapter 11 requires a significant time commitment on the part of owners and managers. The “bankruptcy bargain” is that, in exchange for stopping collection of debts and other bankruptcy protections, you provide full disclosure of your company’s financial condition to creditors and the court, both at the beginning of the case and on a monthly basis thereafter.
While the bankruptcy is ongoing, you owe what’s called a “fiduciary” duty to your creditors, which means you must keep them highly informed and be very honest and protective of their interests before your own interests.
A reorganization can drain an already stressed business, because management personnel must take time to participate in bankruptcy proceedings. And the legal expenses are significant.
Most reorganizations fail, usually for lack of a real plan to solve the underlying business problems.
Is the business one that you could start up again after a liquidation of the current business?
Businesses that require little capital, have few assets, or are really just extensions of the owner’s skills and personality are ones that it may not pay to reorganize. The owners may be better off liquidating the business, in or out of bankruptcy, and starting over in a fresh business entity. This can be a complex task and requires good professional advice to do correctly.
A Chapter 7 may be the best choice when:
* The business has no future
* There are no substantial assets or qualities that cannot be reproduced, or
* The debts are so overwhelming that restructuring them isn’t feasible.
A Chapter 7 bankruptcy can provide a corporation with an orderly liquidation under the direction of the trustee and at no expense to shareholders. Creditors are assured that they will be paid to the extent of the available assets and the priority of their claim.
As former management, you’re assured that the assets that are available go (after the expenses of the bankruptcy) to pay taxes for which you may be individually liable.
Deciding whether bankruptcy is appropriate for your business may be one of the most difficult decisions you’ll ever make. But having information about what could happen to you and your business in the bankruptcy process can help.
http://bankruptcy.lawyers.com/Small-Business-Bankruptcy-Relief.html
Is the business a corporation, partnership or proprietorship?
Corporations and partnerships are legal entities separate from their shareholders or partners, and can file Chapter 7 or Chapter 11 bankruptcy in their own right.
But be aware that in a partnership’s Chapter 7 bankruptcy, the trustee can sue the general partners of the partnership if the partnership’s assets are insufficient to pay partnership debts. As a result, partners may be facing a suit by a well-funded trustee suing for the benefit of all creditors of the partnership.
Get good advice before contemplating a partnership bankruptcy.
Proprietorships are just an extension of the owner and can’t file bankruptcy alone. The proprietor must file the bankruptcy, as the property and debts of the business are really just one form of assets owned by the proprietor. The individual owner may file a Chapter 7, Chapter 11 or Chapter 13 bankruptcy (if the debt limits are met).
Should the business be reorganized or liquidated?
To answer this question, you have to know what has caused the problems the business now faces and the prospects for change.
Reorganization can’t create a market, increase gross revenue or make up for a poor fit between the skills that are available and the skills that are required to run the business. But reorganization can:
* Free up cash from paying old debt to finance current operations
* Make it easier to reject leases or contracts that are no longer advantageous (like an expensive facility lease or unfortunate equipment purchase)
* Prevent the loss of vital assets or cash to creditor collection actions.
In between Chapter 7 liquidation and reorganization, a Chapter 13 or Chapter 11 bankruptcy could provide breathing space for you to sell the business as a going concern or jettison assets in something other than a fire sale. The resulting profit (called “proceeds”) could pay taxes or unpaid salaries. Selling the business could mean ongoing jobs for your work force under new ownership. The bankruptcy could then be converted to a Chapter 7 bankruptcy, or dismissed if bankruptcy protection is no longer needed. The court will probably make you pay creditors from sale profits in order to get the bankruptcy case dismissed.
How much of the business debt is “secured”?
The division of debt between “secured” and “unsecured” guides what reorganization can do for your business. “Secured debt” is a creditor’s claim that is secured by a lien of some type in your property, either by your agreement or involuntarily, such as with a court judgment or taxes.
Purchase money security interests (a security interest the seller of goods takes at the time the goods are purchased) can be avoided or “stripped down” to the current value of the purchased goods in Chapter 11 and 13 bankruptcies. Creditors with purchase money security interests in goods with lower value almost never file a lawsuit to enforce their interest in the goods.
In bankruptcy planning, it’s important to know if judgment liens have been “perfected” (recorded with the right governmental agency), as secured debts are totaled separately from unsecured debts in calculating your eligibility for Chapter 13 bankruptcy. With a Chapter 13 proceeding, these debts can be “stripped down” to the value of the assets to which the lien attaches.
Recording a tax lien gives a creditor a lien on all of the taxpayer’s real estate and personal property. It can be eliminated in Chapter 13 bankruptcy if there isn’t any equity in the property. But tax liens can even reach retirement savings and 401(k) plans that are beyond the grasp of other creditors.
In most secured bank or SBA loans, the borrower gives the lender a security interest in all the borrower’s personal property. This is called a “blanket security interest” because the lien “blankets” all the borrower’s assets. (“Personal” here means everything but real estate, not “personal” as opposed to “business” assets.) Even things like accounts receivable and intellectual property can be covered by a blanket security interest. The agreement may also give the creditor a lien in assets purchased after the security agreement is signed.
In Chapter 11 or Chapter 13 bankruptcies, the lien may be “stripped down” to the value of the property at the time the bankruptcy is filed. Since a lender has rights in the items themselves and in any profit from their sale, you may not be free to sell the asset and pocket the profits, or even use the profits to pay other business debts. Spending the profits without the lender’s permission may be a form of fraud, creating a debt you can’t rid yourself of in bankruptcy.
Does management have the resources and desire to engage in the reorganization process?
Bankruptcy reorganization in Chapter 11 requires a significant time commitment on the part of owners and managers. The “bankruptcy bargain” is that, in exchange for stopping collection of debts and other bankruptcy protections, you provide full disclosure of your company’s financial condition to creditors and the court, both at the beginning of the case and on a monthly basis thereafter.
While the bankruptcy is ongoing, you owe what’s called a “fiduciary” duty to your creditors, which means you must keep them highly informed and be very honest and protective of their interests before your own interests.
A reorganization can drain an already stressed business, because management personnel must take time to participate in bankruptcy proceedings. And the legal expenses are significant.
Most reorganizations fail, usually for lack of a real plan to solve the underlying business problems.
Is the business one that you could start up again after a liquidation of the current business?
Businesses that require little capital, have few assets, or are really just extensions of the owner’s skills and personality are ones that it may not pay to reorganize. The owners may be better off liquidating the business, in or out of bankruptcy, and starting over in a fresh business entity. This can be a complex task and requires good professional advice to do correctly.
A Chapter 7 may be the best choice when:
* The business has no future
* There are no substantial assets or qualities that cannot be reproduced, or
* The debts are so overwhelming that restructuring them isn’t feasible.
A Chapter 7 bankruptcy can provide a corporation with an orderly liquidation under the direction of the trustee and at no expense to shareholders. Creditors are assured that they will be paid to the extent of the available assets and the priority of their claim.
As former management, you’re assured that the assets that are available go (after the expenses of the bankruptcy) to pay taxes for which you may be individually liable.
Deciding whether bankruptcy is appropriate for your business may be one of the most difficult decisions you’ll ever make. But having information about what could happen to you and your business in the bankruptcy process can help.
http://bankruptcy.lawyers.com/Small-Business-Bankruptcy-Relief.html
Salvaging a Troubled Business
Businesses in financial crisis are often swirling in chaos. Managers get consumed with putting out fires. But when you're moving from one emergency to another, it's easy to lose track of the road ahead.
Many managers make common mistakes, from letting go of the wrong people to misleading employees and creditors to not carefully watching their money.
Managers frequently focus on cutting costs, but deciding that the accounting folks are expendable is a frequent error. Tracking financial data is crucial when you're trying to save a business. If the accounting personnel contributed to the financial crisis, it's better to hire replacements instead of sweeping out all the financial folks. Of course, where there's employee fraud, complete incompetence, intentional misreporting or other grievous woes, they've got to go.
New accounting personnel, no matter how competent, need current employees to explain the existing systems, location of records, types of reports and any idiosyncrasies of the bookkeeping system. Without time to transition from old to new, the new number crunchers may have to do more forensic accounting - trying to reconstruct what has happened in the past - than regular financial reporting. Without good accounting folks, a business can easily lose the ability to get timely, accurate financial information.
Whether a restructuring takes place out of court or through a reorganization plan in bankruptcy, keeping on good terms with company creditors is not only wise but could be the glue that makes a bad financial situation better. Even unfavorable news is better than no news at all: if no one's returning your creditors' calls, they will likely assume there's something more dastardly going on than them simply not getting paid.
Don't Lie
What's worse than not returning calls, however, is giving misleading information. The person who wants to stay in business usually thinks that any admission of financial distress is a bad idea, and that it's better to either say nothing or pass along inaccurate information in the hope that credit won't dry up. The theory seems to be that lack of information merely leads to nothing worse than speculation. But misleading information can be infinitely damaging, leading to distrust when the truth is eventually discovered.
Giving accurate financial information is crucial to keeping a good relationship with creditors, and increases the odds of a successful reorganization.
Employees should be treated with no less respect than creditors. Rumors of financial distress within an organization are sure to trigger a mass mailing of resumes.
Management in a financially challenged business should examine each segment of the company to see what can be changed or eliminated in order to better the odds of surviving.
Those parts of the business that drain more from the bottom line than they contribute can be labeled "bleeders." Not staunching that negative cash flow - cutting costs and positions - could lead to the company's demise.
Spend Wisely
Managers should also turn a careful eye to overhead, which includes things like travel, insurance, rent and utilities. Are there any sacred cow expenditures that could be sacrificed? For example, prestige alone may not be a good enough reason to remain in a high-rent district.
With financial woes, expect creditors to want cash for any deliveries.
A struggling business also needs to stash some cash to cover potential bankruptcy costs, such as trustee and appraiser fees and deposits to keep utilities going.
There are a few ways to come up with the cash - borrowing, selling securities, liquidating property that isn't essential, keeping proceeds of accounts that would otherwise be turned over to a secured lender, and so on. But beware that some of these cash-producing methods are subject to the claims of third parties, and others may involve fraud or securities violations.
Don't Be Dumb
While raising cash is crucial, avoid doing anything that gives rise to graver problems than just being broke.
Since companies pay government agencies from payroll withholdings, the temptation in financially troubled times is to treat such agencies as involuntary lenders. But those responsible face liability, and the unpaid taxes can later trip up a Chapter 11 bankruptcy reorganization plan.
The pressures of debt can cause you to make decisions that may appear smart in the short term, but later turn out to be unwise. Think ahead.
By avoiding common mistakes, debtors have a fighting chance of avoiding bankruptcy. But even if you do end up in a Chapter 11 bankruptcy, your odds of recovery are better.
http://bankruptcy.lawyers.com/Salvaging-a-Troubled-Business.html
Many managers make common mistakes, from letting go of the wrong people to misleading employees and creditors to not carefully watching their money.
Managers frequently focus on cutting costs, but deciding that the accounting folks are expendable is a frequent error. Tracking financial data is crucial when you're trying to save a business. If the accounting personnel contributed to the financial crisis, it's better to hire replacements instead of sweeping out all the financial folks. Of course, where there's employee fraud, complete incompetence, intentional misreporting or other grievous woes, they've got to go.
New accounting personnel, no matter how competent, need current employees to explain the existing systems, location of records, types of reports and any idiosyncrasies of the bookkeeping system. Without time to transition from old to new, the new number crunchers may have to do more forensic accounting - trying to reconstruct what has happened in the past - than regular financial reporting. Without good accounting folks, a business can easily lose the ability to get timely, accurate financial information.
Whether a restructuring takes place out of court or through a reorganization plan in bankruptcy, keeping on good terms with company creditors is not only wise but could be the glue that makes a bad financial situation better. Even unfavorable news is better than no news at all: if no one's returning your creditors' calls, they will likely assume there's something more dastardly going on than them simply not getting paid.
Don't Lie
What's worse than not returning calls, however, is giving misleading information. The person who wants to stay in business usually thinks that any admission of financial distress is a bad idea, and that it's better to either say nothing or pass along inaccurate information in the hope that credit won't dry up. The theory seems to be that lack of information merely leads to nothing worse than speculation. But misleading information can be infinitely damaging, leading to distrust when the truth is eventually discovered.
Giving accurate financial information is crucial to keeping a good relationship with creditors, and increases the odds of a successful reorganization.
Employees should be treated with no less respect than creditors. Rumors of financial distress within an organization are sure to trigger a mass mailing of resumes.
Management in a financially challenged business should examine each segment of the company to see what can be changed or eliminated in order to better the odds of surviving.
Those parts of the business that drain more from the bottom line than they contribute can be labeled "bleeders." Not staunching that negative cash flow - cutting costs and positions - could lead to the company's demise.
Spend Wisely
Managers should also turn a careful eye to overhead, which includes things like travel, insurance, rent and utilities. Are there any sacred cow expenditures that could be sacrificed? For example, prestige alone may not be a good enough reason to remain in a high-rent district.
With financial woes, expect creditors to want cash for any deliveries.
A struggling business also needs to stash some cash to cover potential bankruptcy costs, such as trustee and appraiser fees and deposits to keep utilities going.
There are a few ways to come up with the cash - borrowing, selling securities, liquidating property that isn't essential, keeping proceeds of accounts that would otherwise be turned over to a secured lender, and so on. But beware that some of these cash-producing methods are subject to the claims of third parties, and others may involve fraud or securities violations.
Don't Be Dumb
While raising cash is crucial, avoid doing anything that gives rise to graver problems than just being broke.
Since companies pay government agencies from payroll withholdings, the temptation in financially troubled times is to treat such agencies as involuntary lenders. But those responsible face liability, and the unpaid taxes can later trip up a Chapter 11 bankruptcy reorganization plan.
The pressures of debt can cause you to make decisions that may appear smart in the short term, but later turn out to be unwise. Think ahead.
By avoiding common mistakes, debtors have a fighting chance of avoiding bankruptcy. But even if you do end up in a Chapter 11 bankruptcy, your odds of recovery are better.
http://bankruptcy.lawyers.com/Salvaging-a-Troubled-Business.html
Commercial Mortgage Foreclosure
If youÂ?re behind on your commercial building payments, your lender can declare a default and foreclose on your property.
When you took out your building loan, you gave your lender a mortgage (called a deed of trust in some states). This created a security interest in your property that gives the lender the right to start foreclosure proceedings to force a sale of your property if you fail to pay your loan according to terms.
The good news is that lenders donÂ?t like foreclosures because they're costly and difficult. The bad news is that lenders wonÂ?t hesitate to foreclose on past due loans if they arenÂ?t given better options.
What To Do First
The chances are that your commercial building loan is only a part of bigger financial problems. DonÂ?t stick your head in the sand and wait for more bad news. Develop a game plan to deal with the situation immediately. Your options include:
* Reorganizing, consolidating or even eliminating debts through proceedings that may include bankruptcy
* Trying to work out a compromise with your lender
* Selling your building
Talk to a bankruptcy lawyer or someone who professionally counsels people with credit problems. You shouldnÂ?t have any trouble in setting up a free consultation.
A lawyer should explain available options to you at your first meeting. The lawyer should also explain how he or she would expect to be paid. Lawyers who specialize in these matters have ways to work out payment arrangements that their clients can afford.
Negotiating With Your Lender
Talk to your lender about a compromise, such as:
* Different payment terms (lower payments over a longer period of time)
* Forgiving some late payments now in exchange for a longer period of payment
* Lower payments in exchange for a higher interest rate over a longer payment period
* Refinancing at a lower interest rate (to make payments lower)
Lenders are not always willing to compromise. The best chance you may have to strike a compromise is to have a lawyer representing you in the negotiations.
Deeds In Lieu of Foreclosure
If you canÂ?t reach a compromise, consider offering to convey the property back to the lender voluntarily by a Â?deed in lieu of foreclosureÂ? (sometimes called Â?deed in lieu of forfeitureÂ?).
A lender may be hesitant to accept a Â?deed in lieuÂ? if state law provides a borrower with a right to redeem property for a certain period of time (e.g., up to a year later).
YouÂ?ll definitely want a lawyer involved in negotiating the details with your lender.
A deed in lieu of foreclosure will still show up on your credit report, which could make it difficult to buy property in the future.
The Foreclosure Process
State laws vary greatly, but the foreclosure process generally involves:
* The lender giving you a written notice of default, which will likely come by certified mail
* Your being given a period of time after proper notice pay the lender the amount required to cure the default and to reinstate your loan
* The lender electing to proceed with foreclosure under available remedies, which may include:
o Pursuing a judicial foreclosure by filing a lawsuit to obtain a court order to sell the property
o Pursuing a non-judicial foreclosure by following procedures spelled out in your mortgage (or deed of trust) that allow a trustee to foreclose on and sell your property without a court order
* After the required time has elapsed, your being given a notice of foreclosure sale
* A public sale being held by auction where the highest bidder can buy your property
* If no one bids enough, the lender itself buying the property by submitting a credit bid based on the amount you own on your mortgage
* If the lender ends up with the property, it being sold by private sale at a later date
* If you have not vacated the property by the time of the foreclosure sale, an unlawful detainer lawsuit being filed to evict you
At any point during these proceedings, you are usually in the position to keep your property if you pay off the loan and pay for foreclosure costs.
You may have defenses that you can assert. You can also stop a foreclosure temporarily by filing bankruptcy, which imposes an automatic stay that prevents a lender from proceeding forward without permission from the bankruptcy court. However, you have to be realistic in assessing your options since the laws in all states give lenders many rights when it comes to protecting their security interests.
http://real-estate.lawyers.com/commercial-real-estate/Commercial-Mortgage-Foreclosure.html
When you took out your building loan, you gave your lender a mortgage (called a deed of trust in some states). This created a security interest in your property that gives the lender the right to start foreclosure proceedings to force a sale of your property if you fail to pay your loan according to terms.
The good news is that lenders donÂ?t like foreclosures because they're costly and difficult. The bad news is that lenders wonÂ?t hesitate to foreclose on past due loans if they arenÂ?t given better options.
What To Do First
The chances are that your commercial building loan is only a part of bigger financial problems. DonÂ?t stick your head in the sand and wait for more bad news. Develop a game plan to deal with the situation immediately. Your options include:
* Reorganizing, consolidating or even eliminating debts through proceedings that may include bankruptcy
* Trying to work out a compromise with your lender
* Selling your building
Talk to a bankruptcy lawyer or someone who professionally counsels people with credit problems. You shouldnÂ?t have any trouble in setting up a free consultation.
A lawyer should explain available options to you at your first meeting. The lawyer should also explain how he or she would expect to be paid. Lawyers who specialize in these matters have ways to work out payment arrangements that their clients can afford.
Negotiating With Your Lender
Talk to your lender about a compromise, such as:
* Different payment terms (lower payments over a longer period of time)
* Forgiving some late payments now in exchange for a longer period of payment
* Lower payments in exchange for a higher interest rate over a longer payment period
* Refinancing at a lower interest rate (to make payments lower)
Lenders are not always willing to compromise. The best chance you may have to strike a compromise is to have a lawyer representing you in the negotiations.
Deeds In Lieu of Foreclosure
If you canÂ?t reach a compromise, consider offering to convey the property back to the lender voluntarily by a Â?deed in lieu of foreclosureÂ? (sometimes called Â?deed in lieu of forfeitureÂ?).
A lender may be hesitant to accept a Â?deed in lieuÂ? if state law provides a borrower with a right to redeem property for a certain period of time (e.g., up to a year later).
YouÂ?ll definitely want a lawyer involved in negotiating the details with your lender.
A deed in lieu of foreclosure will still show up on your credit report, which could make it difficult to buy property in the future.
The Foreclosure Process
State laws vary greatly, but the foreclosure process generally involves:
* The lender giving you a written notice of default, which will likely come by certified mail
* Your being given a period of time after proper notice pay the lender the amount required to cure the default and to reinstate your loan
* The lender electing to proceed with foreclosure under available remedies, which may include:
o Pursuing a judicial foreclosure by filing a lawsuit to obtain a court order to sell the property
o Pursuing a non-judicial foreclosure by following procedures spelled out in your mortgage (or deed of trust) that allow a trustee to foreclose on and sell your property without a court order
* After the required time has elapsed, your being given a notice of foreclosure sale
* A public sale being held by auction where the highest bidder can buy your property
* If no one bids enough, the lender itself buying the property by submitting a credit bid based on the amount you own on your mortgage
* If the lender ends up with the property, it being sold by private sale at a later date
* If you have not vacated the property by the time of the foreclosure sale, an unlawful detainer lawsuit being filed to evict you
At any point during these proceedings, you are usually in the position to keep your property if you pay off the loan and pay for foreclosure costs.
You may have defenses that you can assert. You can also stop a foreclosure temporarily by filing bankruptcy, which imposes an automatic stay that prevents a lender from proceeding forward without permission from the bankruptcy court. However, you have to be realistic in assessing your options since the laws in all states give lenders many rights when it comes to protecting their security interests.
http://real-estate.lawyers.com/commercial-real-estate/Commercial-Mortgage-Foreclosure.html
Dealing with Your Customer's Bankruptcy
Every business that extends credit has had to deal with customers filing bankruptcy. If you happen to be a newly established small business owner who has just received a notice that one of your has filed or is going to file bankruptcy, you are probably so mad you can’t see straight.
The debtor has the benefit of an “automatic stay” immediately upon filing a bankruptcy petition. That stops you from taking any further action to try to collect the debt unless or until the bankruptcy court decides to the contrary.
What can you do in this situation?
File a Proof of Claim
You should at least take steps to file a timely file a Proof of Claim in the bankruptcy.
In the usual case, creditors will receive a notice of the bankruptcy that will have a form for the proof of claim on the backside of the notice. The notice should provide you with instructions on how to fill out the form and give you a deadline by when it must be filed. By filing a Proof of Claim, you’ll be included with the list of creditors who may eventually end up being paid a slice of the remaining pie of the debtor’s assets.
Is There Someone Else You Can Go After?
If you were lucky enough to have someone personally guarantee your account, making a demand on that person would naturally be the next step.
Are there any co-debtors? The most common example may be spouses who are “jointly and severally liable” on the same debt (meaning that you can go after one or both of them for the whole amount owed). Even if the spouses happen to be divorced and only one of them ran up the debt obligation, it’s possible that they may both be held liable for the debt if they were married at the time either of them signed the paperwork.
Are there any possible remedies against the management or owners of any business that owes you money? This is something you should explore with legal counsel.
Are There Other Alternatives?
There are many different options you can pursue as a creditor in a bankruptcy. They include:
* Petitioning the bankruptcy court for relief from the automatic stay. This may encourage the debtor to make arrangements for paying you in an amount at least equal to the value of your collateral.
* Request permission from the bankruptcy court to continue with any lawsuit you’d already started at the time the bankruptcy was filed. A judgment creditor (someone who has a judgment against the debtor) may be repaid sooner than a general unsecured creditor.
* Petition to have the bankruptcy dismissed, if the debtor isn’t complying with the bankruptcy rules or the orders of the bankruptcy court
* Petition the bankruptcy court to create or be a part of a creditors committee to oversee the operations of the bankruptcy debtor
* Petition to have a bankruptcy trustee appointed if the debtor filed a Chapter 11 proceeding that generally doesn’t require that a trustee be appointed
* Sue other creditors to try to force them to give money back to the bankruptcy proceeding if they were paid in “preference” to other creditors. A “preference” is a preferential payment that a debtor makes on old debt within three months of filing bankruptcy (or within a year if the payment is made to a family member or some other insider who has a special relationship with the debtor).
* Petition the bankruptcy court to deny a discharge of the debt in whole or in part, if you think the debtor has acted fraudulently.
When Should a Creditor Pursue One of These Remedies?
In deciding if you want to pursue the matter further, consider:
* How much money is involved? If this is but one of your accounts out of hundreds, it may not be worthwhile pursuing beyond filing a proof of claim – unless substantial dollars are involved.
* Is there enough money involved to hire a lawyer to represent you in bankruptcy court? The bankruptcy laws are so complicated that most lawyers steer completely clear of bankruptcy court. The average businessman will be a fish out of water in bankruptcy court. If your business is organized as a separate legal entity like a corporation, you may also have to hire a lawyer to represent your company in court.
* Are you a secured or unsecured creditor? If you are an unsecured creditor (meaning you don’t have any collateral you can take if the debt isn’t paid) and the debtor’s liabilities greatly exceed the assets, you may be pursuing a worthless cause. If you have a security interest in collateral that still has some value, it may be worth going the next step.
* How much time can you afford to spend on the matter? Even if you hire an attorney, pursuing a debtor in bankruptcy is going to require a lot of your time. You may have to attend hearings and possibly even participate on a creditors’ committee.
* What kind of bankruptcy is involved? The likelihood of a creditor getting paid is going to depend on whether or not the debtor is simply giving up the ghost and trying to obtain a discharge of all his or her debts (for example, with a Chapter 7 bankruptcy) or is trying to restructure or reorganize debts and eventually pay them off (for example, a Chapter 11 or Chapter 13 bankruptcy).
http://bankruptcy.lawyers.com/commercial-bankruptcy/Dealing-with-Your-Customers-Bankruptcy.html
The debtor has the benefit of an “automatic stay” immediately upon filing a bankruptcy petition. That stops you from taking any further action to try to collect the debt unless or until the bankruptcy court decides to the contrary.
What can you do in this situation?
File a Proof of Claim
You should at least take steps to file a timely file a Proof of Claim in the bankruptcy.
In the usual case, creditors will receive a notice of the bankruptcy that will have a form for the proof of claim on the backside of the notice. The notice should provide you with instructions on how to fill out the form and give you a deadline by when it must be filed. By filing a Proof of Claim, you’ll be included with the list of creditors who may eventually end up being paid a slice of the remaining pie of the debtor’s assets.
Is There Someone Else You Can Go After?
If you were lucky enough to have someone personally guarantee your account, making a demand on that person would naturally be the next step.
Are there any co-debtors? The most common example may be spouses who are “jointly and severally liable” on the same debt (meaning that you can go after one or both of them for the whole amount owed). Even if the spouses happen to be divorced and only one of them ran up the debt obligation, it’s possible that they may both be held liable for the debt if they were married at the time either of them signed the paperwork.
Are there any possible remedies against the management or owners of any business that owes you money? This is something you should explore with legal counsel.
Are There Other Alternatives?
There are many different options you can pursue as a creditor in a bankruptcy. They include:
* Petitioning the bankruptcy court for relief from the automatic stay. This may encourage the debtor to make arrangements for paying you in an amount at least equal to the value of your collateral.
* Request permission from the bankruptcy court to continue with any lawsuit you’d already started at the time the bankruptcy was filed. A judgment creditor (someone who has a judgment against the debtor) may be repaid sooner than a general unsecured creditor.
* Petition to have the bankruptcy dismissed, if the debtor isn’t complying with the bankruptcy rules or the orders of the bankruptcy court
* Petition the bankruptcy court to create or be a part of a creditors committee to oversee the operations of the bankruptcy debtor
* Petition to have a bankruptcy trustee appointed if the debtor filed a Chapter 11 proceeding that generally doesn’t require that a trustee be appointed
* Sue other creditors to try to force them to give money back to the bankruptcy proceeding if they were paid in “preference” to other creditors. A “preference” is a preferential payment that a debtor makes on old debt within three months of filing bankruptcy (or within a year if the payment is made to a family member or some other insider who has a special relationship with the debtor).
* Petition the bankruptcy court to deny a discharge of the debt in whole or in part, if you think the debtor has acted fraudulently.
When Should a Creditor Pursue One of These Remedies?
In deciding if you want to pursue the matter further, consider:
* How much money is involved? If this is but one of your accounts out of hundreds, it may not be worthwhile pursuing beyond filing a proof of claim – unless substantial dollars are involved.
* Is there enough money involved to hire a lawyer to represent you in bankruptcy court? The bankruptcy laws are so complicated that most lawyers steer completely clear of bankruptcy court. The average businessman will be a fish out of water in bankruptcy court. If your business is organized as a separate legal entity like a corporation, you may also have to hire a lawyer to represent your company in court.
* Are you a secured or unsecured creditor? If you are an unsecured creditor (meaning you don’t have any collateral you can take if the debt isn’t paid) and the debtor’s liabilities greatly exceed the assets, you may be pursuing a worthless cause. If you have a security interest in collateral that still has some value, it may be worth going the next step.
* How much time can you afford to spend on the matter? Even if you hire an attorney, pursuing a debtor in bankruptcy is going to require a lot of your time. You may have to attend hearings and possibly even participate on a creditors’ committee.
* What kind of bankruptcy is involved? The likelihood of a creditor getting paid is going to depend on whether or not the debtor is simply giving up the ghost and trying to obtain a discharge of all his or her debts (for example, with a Chapter 7 bankruptcy) or is trying to restructure or reorganize debts and eventually pay them off (for example, a Chapter 11 or Chapter 13 bankruptcy).
http://bankruptcy.lawyers.com/commercial-bankruptcy/Dealing-with-Your-Customers-Bankruptcy.html
Facing Involuntary Bankruptcy
Most entrepreneurs are all too aware of the dark cloud of bankruptcy. What many don’t realize, however, is that their creditors can force them into involuntary bankruptcy.
Creditors initiate an involuntary bankruptcy for several reasons, such as:
* It forces a debtor to confront all his creditors at once, instead of forking over money only to those who press the hardest
* It also keeps a debtor from draining all his assets before finally giving up and filing for bankruptcy
But woe to aggressive creditors when the bankruptcy court denies their petition for involuntary bankruptcy.
Beginning an Involuntary Bankruptcy
Creditors begin an involuntary bankruptcy case by filing a petition and a summons with the clerk of the U.S. Bankruptcy Court. The debtor has 20 days to file objections. If that happens, the case can go to trial. If not, the bankruptcy proceeds.
But an involuntary case can be initiated only under Chapter 7 or Chapter 11 of the Bankruptcy Code.
Under Chapter 11, the debtor can stay in business with a plan of reorganization. Creditors get paid from the cash flow of the business. A Chapter 7 case, however, involves closing shop and liquidating the debtor's assets. In both cases, only creditors with claims allowed by the bankruptcy court get money from the debtor's estate.
A Chapter 7 or Chapter 11 petition can be filed against anyone or any entity that owes money, except for:
* Farmers
* Nonprofit groups
* Banks
* Insurance companies
* Credit unions
* Savings-and-loan institutions
Additionally, railroads can’t be debtors under chapter 7, and stockbrokers and commodity brokers can’t be debtors under Chapter 11.
Paying Up
There are two ways a debtor can become the target of an involuntary bankruptcy.
The first arises when a debtor isn’t paying up, aside from any disputed arrears. This includes regularly missing a significant number of payments or regularly missing sizable payments. The other is if a custodian was appointed or took possession of the debtor’s property within 120 days before the petition was filed.
Not a Sure Bet
If a debtor has 12 or more creditors, an involuntary petition needs at least three creditors who are owed a minimum of $10,775 in total. If there are fewer than 12 creditors – aside from employees, insiders and anyone getting preferences — only one creditor owed at least $10,775 is needed.
Creditors take a risk. If a trial finds a debtor is fair game for an involuntary bankruptcy petition, the bankruptcy court enters an order for relief. The petitioning creditors can then collect their expenses and attorney's fees right away.
But if the court finds the petition was filed in bad faith, then it can award monetary damages and attorneys’ fees to the debtor, leaving the creditor out even more money.
Because of this risk, creditors use involuntary bankruptcy petitions as a last resort, and only when they feel confident of winning.
http://bankruptcy.lawyers.com/Facing-Involuntary-Bankruptcy.html
Creditors initiate an involuntary bankruptcy for several reasons, such as:
* It forces a debtor to confront all his creditors at once, instead of forking over money only to those who press the hardest
* It also keeps a debtor from draining all his assets before finally giving up and filing for bankruptcy
But woe to aggressive creditors when the bankruptcy court denies their petition for involuntary bankruptcy.
Beginning an Involuntary Bankruptcy
Creditors begin an involuntary bankruptcy case by filing a petition and a summons with the clerk of the U.S. Bankruptcy Court. The debtor has 20 days to file objections. If that happens, the case can go to trial. If not, the bankruptcy proceeds.
But an involuntary case can be initiated only under Chapter 7 or Chapter 11 of the Bankruptcy Code.
Under Chapter 11, the debtor can stay in business with a plan of reorganization. Creditors get paid from the cash flow of the business. A Chapter 7 case, however, involves closing shop and liquidating the debtor's assets. In both cases, only creditors with claims allowed by the bankruptcy court get money from the debtor's estate.
A Chapter 7 or Chapter 11 petition can be filed against anyone or any entity that owes money, except for:
* Farmers
* Nonprofit groups
* Banks
* Insurance companies
* Credit unions
* Savings-and-loan institutions
Additionally, railroads can’t be debtors under chapter 7, and stockbrokers and commodity brokers can’t be debtors under Chapter 11.
Paying Up
There are two ways a debtor can become the target of an involuntary bankruptcy.
The first arises when a debtor isn’t paying up, aside from any disputed arrears. This includes regularly missing a significant number of payments or regularly missing sizable payments. The other is if a custodian was appointed or took possession of the debtor’s property within 120 days before the petition was filed.
Not a Sure Bet
If a debtor has 12 or more creditors, an involuntary petition needs at least three creditors who are owed a minimum of $10,775 in total. If there are fewer than 12 creditors – aside from employees, insiders and anyone getting preferences — only one creditor owed at least $10,775 is needed.
Creditors take a risk. If a trial finds a debtor is fair game for an involuntary bankruptcy petition, the bankruptcy court enters an order for relief. The petitioning creditors can then collect their expenses and attorney's fees right away.
But if the court finds the petition was filed in bad faith, then it can award monetary damages and attorneys’ fees to the debtor, leaving the creditor out even more money.
Because of this risk, creditors use involuntary bankruptcy petitions as a last resort, and only when they feel confident of winning.
http://bankruptcy.lawyers.com/Facing-Involuntary-Bankruptcy.html
Security Interests in Bankruptcy
The division of debt between "secured" and "unsecured" guides what bankruptcy reorganization can do for you. "Secured debt" is a creditor's claim that is secured by a lien of some type in your property, either by your agreement or involuntarily such as with a court judgment or taxes.
Some secured debts are familiar: mortgages, equity lines of credit and vehicle and equipment loans. These are all liens created by agreement between you and the creditor in some sort of recognizable legal agreement.
There are several other kinds of debt that are secured by liens on property, sometimes without you even realizing it:
Purchase Money Security Interests
These security interests are lien rights that the seller takes in purchased goods when the seller finances the purchase. The lien can be created by a specific written agreement or may arise when the item is financed on the seller's revolving credit or store credit card. This kind of lien does not have to be recorded through the usual filing of a Uniform Commercial Code (UCC) financing statement.
In theory, even if the buyer steers clear of liability on the debt through bankruptcy, the seller still has the right to reclaim the goods. The usual office supply store credit plans give the seller a security interest in the goods purchased. But if you buy the same goods using a Visa or MasterCard (credit provided by a lender other than the seller), you get clear title to the goods. Even if you avoid your liability on the credit card through bankruptcy, the goods charged to the card are yours, free and clear of any security interest in favor of the seller or the credit card issuer.
Purchase money security interests can be avoided or "stripped down" to the current value of the purchased goods in Chapter 11 and 13 bankruptcies.
Creditors with purchase money security interests in goods with lower value almost never file a lawsuit to enforce their interest in the goods. They are not really interested in the goods. They rely on the debtor's fear of repossession to "encourage" debtors to pay for things with little present market value.
Judgment Liens
Usually a judgment does not, in and of itself, give the judgment creditor a lien. The creditor must usually take the additional step of "perfecting" a lien by filing or recording the judgment with the designated government agency to create a lien on the judgment debtor's property.
Check the laws of your state to determine how judgment liens are perfected. Get a report of liens on file with the Secretary of State to know which liens are perfected, and the seniority of each lien. Liens filed first have priority.
In bankruptcy planning, it's important to know if judgment liens have been perfected, as secured debts are totaled separately from unsecured debts in calculating your eligibility for Chapter 13 bankruptcy. With a Chapter 13 proceeding, these debts can be "stripped down" to the value of the assets on which the lien is filed.
Tax Liens
The recording of a tax lien creates a lien on all of the taxpayer's real estate and personal property. It can be eliminated in Chapter 13 bankruptcy if there is no equity in the property. But tax liens can even reach retirement savings and 401(k) plans that are beyond the grasp of other creditors.
Blanket Security Interests
This is the term in most secured bank or SBA loans by which the borrower gives the lender a security interest in all the borrower's personal property: the lien "blankets" all the borrower's assets. ("Personal" here means everything but real estate, not "personal" as opposed to "business" assets.) Even things like accounts receivable and intellectual property can be covered by a blanket security interest. The agreement may also give the creditor a lien in assets purchased after the security agreement is signed.
Since the borrower agreed to give the lender a security interest in the property described in the security agreement, the lien can't be avoided on the grounds it impairs an exemption (the lien is not a "judicial lien"). In Chapter 11 or Chapter 13, the lien may be "stripped down" to the value of the property at the time the bankruptcy is filed.
Since a lender has rights in the items themselves and in any profit from their sale, you may not be free to sell the asset and pocket the profits or even spend the profits paying other business debts. Spending the profits without the lender's permission may be a form of fraud creating a debt you can't get rid of in bankruptcy.
While sorting out the different kinds of security interests is complex and sometimes confusing, it can help you decide whether bankruptcy is a good option for you and your business.
Cathy Moran is a business and bankruptcy lawyer in the San Francisco Bay Area, and was one of the first bankruptcy specialists certified by the California State Bar. Her Web site Bankruptcy in Brief includes a wealth of information on bankruptcy.
http://bankruptcy.lawyers.com/Security-Interests-in-Bankruptcy.html
Some secured debts are familiar: mortgages, equity lines of credit and vehicle and equipment loans. These are all liens created by agreement between you and the creditor in some sort of recognizable legal agreement.
There are several other kinds of debt that are secured by liens on property, sometimes without you even realizing it:
Purchase Money Security Interests
These security interests are lien rights that the seller takes in purchased goods when the seller finances the purchase. The lien can be created by a specific written agreement or may arise when the item is financed on the seller's revolving credit or store credit card. This kind of lien does not have to be recorded through the usual filing of a Uniform Commercial Code (UCC) financing statement.
In theory, even if the buyer steers clear of liability on the debt through bankruptcy, the seller still has the right to reclaim the goods. The usual office supply store credit plans give the seller a security interest in the goods purchased. But if you buy the same goods using a Visa or MasterCard (credit provided by a lender other than the seller), you get clear title to the goods. Even if you avoid your liability on the credit card through bankruptcy, the goods charged to the card are yours, free and clear of any security interest in favor of the seller or the credit card issuer.
Purchase money security interests can be avoided or "stripped down" to the current value of the purchased goods in Chapter 11 and 13 bankruptcies.
Creditors with purchase money security interests in goods with lower value almost never file a lawsuit to enforce their interest in the goods. They are not really interested in the goods. They rely on the debtor's fear of repossession to "encourage" debtors to pay for things with little present market value.
Judgment Liens
Usually a judgment does not, in and of itself, give the judgment creditor a lien. The creditor must usually take the additional step of "perfecting" a lien by filing or recording the judgment with the designated government agency to create a lien on the judgment debtor's property.
Check the laws of your state to determine how judgment liens are perfected. Get a report of liens on file with the Secretary of State to know which liens are perfected, and the seniority of each lien. Liens filed first have priority.
In bankruptcy planning, it's important to know if judgment liens have been perfected, as secured debts are totaled separately from unsecured debts in calculating your eligibility for Chapter 13 bankruptcy. With a Chapter 13 proceeding, these debts can be "stripped down" to the value of the assets on which the lien is filed.
Tax Liens
The recording of a tax lien creates a lien on all of the taxpayer's real estate and personal property. It can be eliminated in Chapter 13 bankruptcy if there is no equity in the property. But tax liens can even reach retirement savings and 401(k) plans that are beyond the grasp of other creditors.
Blanket Security Interests
This is the term in most secured bank or SBA loans by which the borrower gives the lender a security interest in all the borrower's personal property: the lien "blankets" all the borrower's assets. ("Personal" here means everything but real estate, not "personal" as opposed to "business" assets.) Even things like accounts receivable and intellectual property can be covered by a blanket security interest. The agreement may also give the creditor a lien in assets purchased after the security agreement is signed.
Since the borrower agreed to give the lender a security interest in the property described in the security agreement, the lien can't be avoided on the grounds it impairs an exemption (the lien is not a "judicial lien"). In Chapter 11 or Chapter 13, the lien may be "stripped down" to the value of the property at the time the bankruptcy is filed.
Since a lender has rights in the items themselves and in any profit from their sale, you may not be free to sell the asset and pocket the profits or even spend the profits paying other business debts. Spending the profits without the lender's permission may be a form of fraud creating a debt you can't get rid of in bankruptcy.
While sorting out the different kinds of security interests is complex and sometimes confusing, it can help you decide whether bankruptcy is a good option for you and your business.
Cathy Moran is a business and bankruptcy lawyer in the San Francisco Bay Area, and was one of the first bankruptcy specialists certified by the California State Bar. Her Web site Bankruptcy in Brief includes a wealth of information on bankruptcy.
http://bankruptcy.lawyers.com/Security-Interests-in-Bankruptcy.html
Reaffirmation and Voluntary Repayment of Debts
Reaffirmation" of a debt discharged in bankruptcy means that the debtor who has been "discharged" in bankruptcy from the obligation to pay a debt enters into an agreement to pay it anyway.
"Voluntary repayment" of a debt means that a discharged debtor simply makes payments on a discharged debt without taking on any ongoing binding obligation to pay.
Reaffirmation agreements covering debts discharged in bankruptcy are frowned upon in the Bankruptcy Code. There are strict requirements for such agreements, in order to avoid creditor abuse.
For example, a reaffirmation agreement must be made before the bankruptcy discharge has been granted, and must include a statement indicating that the debtor can rescind the agreement within a period of time after filing it. If an attorney represents the debtor, the reaffirmation agreement must be filed in the Bankruptcy Court with an attorney affidavit stating that the agreement is voluntary and doesn't impose an undue hardship on the debtor or the debtor's dependents. If an attorney doesn't represent the debtor, the Bankruptcy Court must review and approve the reaffirmation agreement.
Even if you don't have a formal binding reaffirmation agreement, though, you're always free to voluntarily make payments on a discharged debt without being obligated to continue payments.
Cathy Moran is a business and bankruptcy lawyer in the San Francisco Bay Area, and was one of the first bankruptcy specialists certified by the California State Bar. Her Web site Bankruptcy in Brief includes much information on bankruptcy.
http://bankruptcy.lawyers.com/Reaffirmation-and-Voluntary-Repayment-of-Debts.html
"Voluntary repayment" of a debt means that a discharged debtor simply makes payments on a discharged debt without taking on any ongoing binding obligation to pay.
Reaffirmation agreements covering debts discharged in bankruptcy are frowned upon in the Bankruptcy Code. There are strict requirements for such agreements, in order to avoid creditor abuse.
For example, a reaffirmation agreement must be made before the bankruptcy discharge has been granted, and must include a statement indicating that the debtor can rescind the agreement within a period of time after filing it. If an attorney represents the debtor, the reaffirmation agreement must be filed in the Bankruptcy Court with an attorney affidavit stating that the agreement is voluntary and doesn't impose an undue hardship on the debtor or the debtor's dependents. If an attorney doesn't represent the debtor, the Bankruptcy Court must review and approve the reaffirmation agreement.
Even if you don't have a formal binding reaffirmation agreement, though, you're always free to voluntarily make payments on a discharged debt without being obligated to continue payments.
Cathy Moran is a business and bankruptcy lawyer in the San Francisco Bay Area, and was one of the first bankruptcy specialists certified by the California State Bar. Her Web site Bankruptcy in Brief includes much information on bankruptcy.
http://bankruptcy.lawyers.com/Reaffirmation-and-Voluntary-Repayment-of-Debts.html
Business Bankruptcy - Selecting a Good Lawyer
Bankruptcy lawyers usually specialize either as debtor's counsel or as creditor's counsel. If you're having credit problems or are looking to file bankruptcy, you're definitely going to want a lawyer who has expertise as debtor's counsel. If you have a claim against someone who filed bankruptcy, you're going to want a lawyer with experience in representing creditors like yourself.
You already have a list of prospective lawyers. Now you want to find out every thing you can about the lawyers, and then do some initial screening to whittle down your list to three or four prospective candidates.
* Look at the biographies and Web sites for the lawyers and their law firms. Do they appear to have expertise in the area of business law that you need? Do they have any information on their Web sites that is helpful to you?
* Look for a list of representative clients. Are they the types of clients that you'd want your lawyer representing? Does the lawyer represent other businesses similar to yours?
* Search the Internet under the name of the lawyer and his or her law firm. Can you find any articles, FAQs or other informational pieces the lawyer has written that give you a level of comfort?
* Ask other people if they have heard of the attorneys and what they think about them.
* Contact your state bar association or go to their Web site to find out if the lawyer is in good standing.
* Check out the yellow pages of your telephone directory. Does the lawyer advertise? If so, do you find the ad compelling? Helpful? Tasteful?
* Check out the archives of your local newspaper. Has there been any publicity about the lawyer or the cases that he or she has handled?
* Consider any special needs you have. For example, could you benefit from an attorney who speaks a language other than English?
You shouldn't necessarily cross a lawyer off your list just because he or she didn't have the time to meet with you on short notice. Good bankruptcy lawyers usually have high-volume practices. Sometimes this is by necessity, as people filing bankruptcy aren't usually in the position to pay a lot in attorney's fees, so lawyers need the high volume to make ends meet. As a result, they may not be able to spend a lot of time responding to inquiries from prospective clients. You should also expect that whomever you hire might have to delegate a lot of responsibility to his or her staff.
Debtor's counsel will usually charge a flat fee for a simple bankruptcy. The rates tend to be competitive, so you might want to shop around if you're looking to file bankruptcy. Creditor's counsel usually charges by the hour.
For people filing bankruptcy, hiring debtor's counsel will hopefully be a one-time experience. But if your business routinely has to deal with customers filing bankruptcy, you should think about retaining a lawyer or law firm with expertise to cover all your anticipated business needs.
Look to see if a lawyer is connected with associations that cater to your legal issues. For example, most bar associations have sections in bankruptcy law and other related categories.
Unless there are special circumstances, you'll want to hire a lawyer with an office that is not too far away from your business.
Before You Meet With A Lawyer
* Ask for references. You'd want to talk to people who could comment on the lawyer's skills and trustworthiness. Get a reference from a bank and from other lawyers. A bankruptcy lawyer should also be able to give you the names of several CPA's as references.
* Ask about conflicts of interest. Does the lawyer represent any potential alliance partners? Does the lawyer represent any of your competitors?
* Ask for a copy of a firm brochure and promotional materials the firm may have. Crosscheck these materials against your other sources and references.
http://bankruptcy.lawyers.com/Business-Bankruptcy---Selecting-a-Good-Lawyer.html
You already have a list of prospective lawyers. Now you want to find out every thing you can about the lawyers, and then do some initial screening to whittle down your list to three or four prospective candidates.
* Look at the biographies and Web sites for the lawyers and their law firms. Do they appear to have expertise in the area of business law that you need? Do they have any information on their Web sites that is helpful to you?
* Look for a list of representative clients. Are they the types of clients that you'd want your lawyer representing? Does the lawyer represent other businesses similar to yours?
* Search the Internet under the name of the lawyer and his or her law firm. Can you find any articles, FAQs or other informational pieces the lawyer has written that give you a level of comfort?
* Ask other people if they have heard of the attorneys and what they think about them.
* Contact your state bar association or go to their Web site to find out if the lawyer is in good standing.
* Check out the yellow pages of your telephone directory. Does the lawyer advertise? If so, do you find the ad compelling? Helpful? Tasteful?
* Check out the archives of your local newspaper. Has there been any publicity about the lawyer or the cases that he or she has handled?
* Consider any special needs you have. For example, could you benefit from an attorney who speaks a language other than English?
You shouldn't necessarily cross a lawyer off your list just because he or she didn't have the time to meet with you on short notice. Good bankruptcy lawyers usually have high-volume practices. Sometimes this is by necessity, as people filing bankruptcy aren't usually in the position to pay a lot in attorney's fees, so lawyers need the high volume to make ends meet. As a result, they may not be able to spend a lot of time responding to inquiries from prospective clients. You should also expect that whomever you hire might have to delegate a lot of responsibility to his or her staff.
Debtor's counsel will usually charge a flat fee for a simple bankruptcy. The rates tend to be competitive, so you might want to shop around if you're looking to file bankruptcy. Creditor's counsel usually charges by the hour.
For people filing bankruptcy, hiring debtor's counsel will hopefully be a one-time experience. But if your business routinely has to deal with customers filing bankruptcy, you should think about retaining a lawyer or law firm with expertise to cover all your anticipated business needs.
Look to see if a lawyer is connected with associations that cater to your legal issues. For example, most bar associations have sections in bankruptcy law and other related categories.
Unless there are special circumstances, you'll want to hire a lawyer with an office that is not too far away from your business.
Before You Meet With A Lawyer
* Ask for references. You'd want to talk to people who could comment on the lawyer's skills and trustworthiness. Get a reference from a bank and from other lawyers. A bankruptcy lawyer should also be able to give you the names of several CPA's as references.
* Ask about conflicts of interest. Does the lawyer represent any potential alliance partners? Does the lawyer represent any of your competitors?
* Ask for a copy of a firm brochure and promotional materials the firm may have. Crosscheck these materials against your other sources and references.
http://bankruptcy.lawyers.com/Business-Bankruptcy---Selecting-a-Good-Lawyer.html
Bankruptcy: Preparing to Meet with a Lawyer
It can be a big waste of time for both you and the lawyer if you are not prepared for your first meeting. Being unprepared can end up costing you money, because it will take longer for the lawyer you hire to get up to speed on your bankruptcy matter.
The lawyer will want to know who you are and how you can be contacted, and a little about your personal and business background. A lawyer will clearly want to understand your relationship to your business and be comfortable that you have the authority to speak on behalf of the organization. Therefore, you need to write down all this information in a logical matter and have it available for the lawyer.
If you're going into bankruptcy, it will be necessary to file detailed schedules of assets and debts with the bankruptcy court. Your lawyer may ask you to try to fill out the schedules before your meeting. Sometimes, a lawyer will also try to make a first meeting more productive by sending you a questionnaire to fill out. If this happens, be sure to fill it out and send it in to the lawyer's office before the meeting. Also send along copies of any available documents that may be requested in the questionnaire.
Before you get too far into a meeting or conversation, the lawyer is going to want to know about possible conflicts of interest. If you're filing bankruptcy, bring a list of all your creditors. If the lawyer or the lawyer's firm represents anyone on "the other side of the fence," he or she will have a conflict and will usually not be able to represent you.
A disclosure of all your financial affairs is extremely important in a bankruptcy setting. Tell your lawyer everything. If you fail to do so, you could be accused of bankruptcy fraud, which could prevent you from getting your debts discharged. In the worst case scenario, failing to disclose information to the court could be a crime.
Written documentation of your debts and liabilities is especially important in a bankruptcy setting. Even if a lawyer doesn't ask for documentation beforehand, it's still a good idea to bring a copy of all documents relevant to your situation to the meeting:
* It's absolutely essential that you bring the originals and a copy of any and all loan or financing documents that you have in your possession, including a loan agreement, title policies, insurance policies, a promissory note, a security agreement, guaranties, "UCC" filings, deeds of trust, mortgages, and notices of default.
* Bring any information you have to show payments that were made (bank statements, canceled checks, money order receipts)
* If you're involved in a foreclosure proceeding, bring a copy of all foreclosure documents that you've received.
* Bring the originals and a copy of all correspondence that you may have sent to or received from creditors.
* Dates can be critical. Get a calendar and mark down dates of when things happened and when you received any notices or other documents. Bring the calendar to your meeting to use as a reference.
* If anybody guaranteed a loan or a lease for you, the lawyer will want to know who the guarantor is. You should have this information available, as well as a copy of any guaranty documentation.
* Your lawyer will want to know who you talked with, including the names of any representatives at financial institutions. You should have addresses and telephone numbers available.
Questions To Ask Your Potential Lawyer
Prepare a list of questions to take with you to your first meeting. In theory, no question is too silly to ask. Keep in mind, though, that you don't want to scare a lawyer out of representing you. Some questions you might ask a bankruptcy lawyer would include:
* Should you file bankruptcy?
* What might your other options be?
* How many bankruptcy cases has he or she handled?
* What percentage of his or her practice is in the area of expertise that you need?
* Does the lawyer usually represent debtors or creditors?
* What problems does the lawyer foresee with your case?
* How would the lawyer go about handling your situation? What is the process?
* How long will it take to bring the matter to a conclusion?
* How would the lawyer charge for his or her services?
* Would the lawyer handle the case personally or would it be passed on to some other lawyer or support staff in the firm? If other lawyers or staff may do some of the work, could you meet them?
http://bankruptcy.lawyers.com/Bankruptcy-Preparing-to-Meet-with-a-Lawyer.html
The lawyer will want to know who you are and how you can be contacted, and a little about your personal and business background. A lawyer will clearly want to understand your relationship to your business and be comfortable that you have the authority to speak on behalf of the organization. Therefore, you need to write down all this information in a logical matter and have it available for the lawyer.
If you're going into bankruptcy, it will be necessary to file detailed schedules of assets and debts with the bankruptcy court. Your lawyer may ask you to try to fill out the schedules before your meeting. Sometimes, a lawyer will also try to make a first meeting more productive by sending you a questionnaire to fill out. If this happens, be sure to fill it out and send it in to the lawyer's office before the meeting. Also send along copies of any available documents that may be requested in the questionnaire.
Before you get too far into a meeting or conversation, the lawyer is going to want to know about possible conflicts of interest. If you're filing bankruptcy, bring a list of all your creditors. If the lawyer or the lawyer's firm represents anyone on "the other side of the fence," he or she will have a conflict and will usually not be able to represent you.
A disclosure of all your financial affairs is extremely important in a bankruptcy setting. Tell your lawyer everything. If you fail to do so, you could be accused of bankruptcy fraud, which could prevent you from getting your debts discharged. In the worst case scenario, failing to disclose information to the court could be a crime.
Written documentation of your debts and liabilities is especially important in a bankruptcy setting. Even if a lawyer doesn't ask for documentation beforehand, it's still a good idea to bring a copy of all documents relevant to your situation to the meeting:
* It's absolutely essential that you bring the originals and a copy of any and all loan or financing documents that you have in your possession, including a loan agreement, title policies, insurance policies, a promissory note, a security agreement, guaranties, "UCC" filings, deeds of trust, mortgages, and notices of default.
* Bring any information you have to show payments that were made (bank statements, canceled checks, money order receipts)
* If you're involved in a foreclosure proceeding, bring a copy of all foreclosure documents that you've received.
* Bring the originals and a copy of all correspondence that you may have sent to or received from creditors.
* Dates can be critical. Get a calendar and mark down dates of when things happened and when you received any notices or other documents. Bring the calendar to your meeting to use as a reference.
* If anybody guaranteed a loan or a lease for you, the lawyer will want to know who the guarantor is. You should have this information available, as well as a copy of any guaranty documentation.
* Your lawyer will want to know who you talked with, including the names of any representatives at financial institutions. You should have addresses and telephone numbers available.
Questions To Ask Your Potential Lawyer
Prepare a list of questions to take with you to your first meeting. In theory, no question is too silly to ask. Keep in mind, though, that you don't want to scare a lawyer out of representing you. Some questions you might ask a bankruptcy lawyer would include:
* Should you file bankruptcy?
* What might your other options be?
* How many bankruptcy cases has he or she handled?
* What percentage of his or her practice is in the area of expertise that you need?
* Does the lawyer usually represent debtors or creditors?
* What problems does the lawyer foresee with your case?
* How would the lawyer go about handling your situation? What is the process?
* How long will it take to bring the matter to a conclusion?
* How would the lawyer charge for his or her services?
* Would the lawyer handle the case personally or would it be passed on to some other lawyer or support staff in the firm? If other lawyers or staff may do some of the work, could you meet them?
http://bankruptcy.lawyers.com/Bankruptcy-Preparing-to-Meet-with-a-Lawyer.html
Bankruptcy: Meeting with a Lawyer
* Treat your first meeting as a business consultation. Dress well and be prompt. Be polite and courteous. You will want to impress the lawyer, just as he or she will be trying to impress you.
* Bankruptcy lawyers usually have a high volume of cases and so they may not have a lot of time to spend with you. Don't be offended, but they probably won't want to hear your life story. Thus, don't feel compelled right off the bat to blurt out everything you want to tell the lawyer about your legal issues or needs.
* Let the lawyer do the talking initially. You'll have all sorts of information that you'll want to relate, but the lawyer will be better able to hone in on the background facts that he or she feels are relevant or important. The more prepared you are with completed questionnaires, schedules, documents, diagrams and your own questions, the easier this process will be, and the more you will impress the lawyer.
* During your initial consultation, you'll want to be able to share all relevant information with the lawyer. Even if you don't end up hiring the lawyer, everything you tell him or her during your meeting is subject to the attorney-client privilege, so honesty is in your best interest. Let the lawyer decide what is or is not in your favor. It's much better for the lawyer to know the bad things up front, rather than be surprised later.
* If the lawyer is interested in representing you, you can expect that he or she will go through an educational process with you. You should take the time to make a honest assessment of your situation and, if asked, to be able to relate the thoughts you have to the lawyer. Forget the hand wringing and the excuses. Give your lawyer the straight scoop.
* The lawyer may give you alternatives as to what you can do, and you should discuss the possible consequences of each option. Look for practical legal advice that in your own mind translates into good practical sense.
* Depending up on how well prepared you are, the lawyer may even be able to give you advice on how to proceed. This could be especially important when time is of the essence. For example, if your house is in foreclosure, you may need to file a bankruptcy petition immediately. Thus, by the end of your meeting, you should leave with a clear understanding of what you've accomplished.
* If the lawyer is willing to take your case, you should be told what he or she charges for services. You may be presented with a contract that is called a retainer agreement or a legal services agreement. The lawyer should explain it to you. Read and understand the document before you think about signing it. At that time, or before services are rendered, you may also be asked to provide a retainer or deposit up front.
* Be clear on what is to happen next, and then be sure to follow through on whatever you have been asked to do by your new attorney. The attorney will insist on cooperation from your end. If it's not clearly spelled out in a retainer agreement, also be sure to ask the lawyer how he or she would prefer to communicate with you, and then keep in contact regularly with your attorney.
http://bankruptcy.lawyers.com/Bankruptcy-Meeting-with-a-Lawyer.html
* Bankruptcy lawyers usually have a high volume of cases and so they may not have a lot of time to spend with you. Don't be offended, but they probably won't want to hear your life story. Thus, don't feel compelled right off the bat to blurt out everything you want to tell the lawyer about your legal issues or needs.
* Let the lawyer do the talking initially. You'll have all sorts of information that you'll want to relate, but the lawyer will be better able to hone in on the background facts that he or she feels are relevant or important. The more prepared you are with completed questionnaires, schedules, documents, diagrams and your own questions, the easier this process will be, and the more you will impress the lawyer.
* During your initial consultation, you'll want to be able to share all relevant information with the lawyer. Even if you don't end up hiring the lawyer, everything you tell him or her during your meeting is subject to the attorney-client privilege, so honesty is in your best interest. Let the lawyer decide what is or is not in your favor. It's much better for the lawyer to know the bad things up front, rather than be surprised later.
* If the lawyer is interested in representing you, you can expect that he or she will go through an educational process with you. You should take the time to make a honest assessment of your situation and, if asked, to be able to relate the thoughts you have to the lawyer. Forget the hand wringing and the excuses. Give your lawyer the straight scoop.
* The lawyer may give you alternatives as to what you can do, and you should discuss the possible consequences of each option. Look for practical legal advice that in your own mind translates into good practical sense.
* Depending up on how well prepared you are, the lawyer may even be able to give you advice on how to proceed. This could be especially important when time is of the essence. For example, if your house is in foreclosure, you may need to file a bankruptcy petition immediately. Thus, by the end of your meeting, you should leave with a clear understanding of what you've accomplished.
* If the lawyer is willing to take your case, you should be told what he or she charges for services. You may be presented with a contract that is called a retainer agreement or a legal services agreement. The lawyer should explain it to you. Read and understand the document before you think about signing it. At that time, or before services are rendered, you may also be asked to provide a retainer or deposit up front.
* Be clear on what is to happen next, and then be sure to follow through on whatever you have been asked to do by your new attorney. The attorney will insist on cooperation from your end. If it's not clearly spelled out in a retainer agreement, also be sure to ask the lawyer how he or she would prefer to communicate with you, and then keep in contact regularly with your attorney.
http://bankruptcy.lawyers.com/Bankruptcy-Meeting-with-a-Lawyer.html
Bankruptcy & Divorce in Texas
Believe it or not, a Divorce is usually a primary predictor of a Bankruptcy filing. A significant number of Bankruptcy filings are motivated or precipitated by divorce filing, and the debt liabilities associated or arising from a previous marriage.
In Texas which is a community property state, many people who file for divorce often choose to file for bankruptcy or at least consider the possibility of filing bankruptcy to address their debt arising from their former marriage. It’s quite common for people going through divorce to be under extreme financial stress and economic difficulty. Bankruptcy can sometimes be a way to get control or regain control of your personal finances in certain divorce situations. In the State of Texas and everywhere else in the United States as far as we know, there is no law that says that two people must stay married. There are however, laws that hold people who were once married liable for certain financial responsibilities for the debts incurred while they were married or obligations that arise out of marriage dissolution such as child support, spousal maintenance or alimony. Although a divorce decree most always outlines whose responsibility it is for each debt, the effect on a person’s credit or the collection activity from a creditor after divorce can be an entirely different matter. Despite a divorce decree transferring or making certain debts the sole responsibility of a particular spouse after a divorce, it will not likely stop creditors from attempting to collect debts incurred by one or both spouses before the divorce. Debts incurred in the course of marriage will also stay on your credit report for years after the divorce even if the marital settlement agreement states another spouse is now solely responsible for payment.
If you are planning to file for divorce or are in the middle of a divorce proceeding it may be a wise choice to at least examine your options under the Bankruptcy Code. A Bankruptcy may be able to provide a fresh financial start or the ability to adjust your debts before or after a divorce. Should you or your current spouse in fact be thinking about bankruptcy & divorce, you should keep in mind that the way you or your divorce attorney word your divorce settlement agreement, will have a significant impact on how the filing for Bankruptcy affects your divorce, and vice versa. It is often a good choice to wait until your divorce is finalized before filing for Bankruptcy, as you will have a much clearer picture of you financial condition and personal debt obligations after the divorce is final.
Alternately, if either you and your soon to be ex spouse are thinking about Bankruptcy, you may want to consider jointly filing for Bankruptcy before you file for divorce. This way you will be more likely to know what financial obligations will be discharged when you actually do file for divorce. And, you may also be able to better negotiate with each other with the full knowledge of what you’ll both be facing in both remaining debt as well as available property. A joint Bankruptcy filing before divorce will probably save you at least some money, since you'll only pay for one bankruptcy filing as compared to two, and as such your divorce might be much less complicated. This scenario is only possible if both you and your soon to be ex spouse are willing to work together before filing divorce. It may not be possible to work together with your soon to be former spouse. It is understandable that not all divorces are amicable situations. Many are not open to reasonable negations and tend to become unpleasant & emotionally charged when the issues of finance and marital debts arise.
http://rjabankruptcy.com/articles/bankruptcyanddivorce.html
In Texas which is a community property state, many people who file for divorce often choose to file for bankruptcy or at least consider the possibility of filing bankruptcy to address their debt arising from their former marriage. It’s quite common for people going through divorce to be under extreme financial stress and economic difficulty. Bankruptcy can sometimes be a way to get control or regain control of your personal finances in certain divorce situations. In the State of Texas and everywhere else in the United States as far as we know, there is no law that says that two people must stay married. There are however, laws that hold people who were once married liable for certain financial responsibilities for the debts incurred while they were married or obligations that arise out of marriage dissolution such as child support, spousal maintenance or alimony. Although a divorce decree most always outlines whose responsibility it is for each debt, the effect on a person’s credit or the collection activity from a creditor after divorce can be an entirely different matter. Despite a divorce decree transferring or making certain debts the sole responsibility of a particular spouse after a divorce, it will not likely stop creditors from attempting to collect debts incurred by one or both spouses before the divorce. Debts incurred in the course of marriage will also stay on your credit report for years after the divorce even if the marital settlement agreement states another spouse is now solely responsible for payment.
If you are planning to file for divorce or are in the middle of a divorce proceeding it may be a wise choice to at least examine your options under the Bankruptcy Code. A Bankruptcy may be able to provide a fresh financial start or the ability to adjust your debts before or after a divorce. Should you or your current spouse in fact be thinking about bankruptcy & divorce, you should keep in mind that the way you or your divorce attorney word your divorce settlement agreement, will have a significant impact on how the filing for Bankruptcy affects your divorce, and vice versa. It is often a good choice to wait until your divorce is finalized before filing for Bankruptcy, as you will have a much clearer picture of you financial condition and personal debt obligations after the divorce is final.
Alternately, if either you and your soon to be ex spouse are thinking about Bankruptcy, you may want to consider jointly filing for Bankruptcy before you file for divorce. This way you will be more likely to know what financial obligations will be discharged when you actually do file for divorce. And, you may also be able to better negotiate with each other with the full knowledge of what you’ll both be facing in both remaining debt as well as available property. A joint Bankruptcy filing before divorce will probably save you at least some money, since you'll only pay for one bankruptcy filing as compared to two, and as such your divorce might be much less complicated. This scenario is only possible if both you and your soon to be ex spouse are willing to work together before filing divorce. It may not be possible to work together with your soon to be former spouse. It is understandable that not all divorces are amicable situations. Many are not open to reasonable negations and tend to become unpleasant & emotionally charged when the issues of finance and marital debts arise.
http://rjabankruptcy.com/articles/bankruptcyanddivorce.html
Filing Chapter 7 Bankruptcy
Another Bankruptcy option to deal with foreclosure is to file a Chapter 7 bankruptcy. When you file for Chapter 7 Bankruptcy The Automatic Stay which stops most all legal actions against you goes into effect immediately upon the filing of the Chapter 7. The filing of a Chapter 7 Bankruptcy prior to an actual foreclosure sale of a property will remove your personal liability on the mortgage debt and you will not have any further obligation to continue to pay should the property actually be foreclosed on. Chapter 7 Bankruptcy will also provide possible options to avoid certain tax liabilities.
The Chapter 7 Bankruptcy filing will temporarily stop the foreclosure. After you file, the mortgage company must file a Motion to Lift Stay or similar Motion with the United States Bankruptcy Court in order to foreclose on the property. The Motion, which usually takes a minimum period of 20 to 40 days, could even take up to 2 or 3 months depending on the facts of the case and the Bankruptcy Court’s docket. After the mortgage company obtains the legal right in the Bankruptcy Court to take action against the property, the mortgage company must then re-post the property for another foreclosure sale. This process usually takes about a little more that a month and you will continue to own the house until the actual date of the foreclosure sale. You can still live in the house in the meantime because you still own it. Also this might allow you the time needed to maybe sell your home, refinance it, bring the mortgage current, or at the very least, provide you a bit more time to arrange for somewhere to live.
Some people just want to give back or “surrender” the property to the mortgage company. If that is the case, you won’t be making the payments on the property and as such you could use the opportunity to obtain funds for the expenses of moving.
At the foreclosure sale the lender must sell the property and credit the proceeds to your debt. If any money is left over, the lender must pay it to you. Typically, the sale brings in less than the debt which, in most cases, you will technically owe. The Bankruptcy Court will discharge the balance along with your other unsecured dischargeable debts. When you obtain your Chapter 7 Bankruptcy discharge any mortgage deficiency, which go to include your other dischargeable debts are eliminated, discharged or cancelled. These debts never have to be re-paid.
The Changes to the New Bankruptcy Law now have an impact on the automatic stay in that the mortgage company may be able to move quicker depending on the particulars of the case as well as if you are a previous bankruptcy filer. Additionally the filing of a Bankruptcy to simply with the intent to delay creditors is a violation of the law. You should contact an Attorney experienced in Bankruptcy & foreclosure to determine your options. Contact The Law Offices Of R.J.Atkinson,LLC to see how filing a Chapter 7 Bankruptcy may affect your foreclosure.
http://rjabankruptcy.com/articles/bankruptcyandforeclosure.html
The Chapter 7 Bankruptcy filing will temporarily stop the foreclosure. After you file, the mortgage company must file a Motion to Lift Stay or similar Motion with the United States Bankruptcy Court in order to foreclose on the property. The Motion, which usually takes a minimum period of 20 to 40 days, could even take up to 2 or 3 months depending on the facts of the case and the Bankruptcy Court’s docket. After the mortgage company obtains the legal right in the Bankruptcy Court to take action against the property, the mortgage company must then re-post the property for another foreclosure sale. This process usually takes about a little more that a month and you will continue to own the house until the actual date of the foreclosure sale. You can still live in the house in the meantime because you still own it. Also this might allow you the time needed to maybe sell your home, refinance it, bring the mortgage current, or at the very least, provide you a bit more time to arrange for somewhere to live.
Some people just want to give back or “surrender” the property to the mortgage company. If that is the case, you won’t be making the payments on the property and as such you could use the opportunity to obtain funds for the expenses of moving.
At the foreclosure sale the lender must sell the property and credit the proceeds to your debt. If any money is left over, the lender must pay it to you. Typically, the sale brings in less than the debt which, in most cases, you will technically owe. The Bankruptcy Court will discharge the balance along with your other unsecured dischargeable debts. When you obtain your Chapter 7 Bankruptcy discharge any mortgage deficiency, which go to include your other dischargeable debts are eliminated, discharged or cancelled. These debts never have to be re-paid.
The Changes to the New Bankruptcy Law now have an impact on the automatic stay in that the mortgage company may be able to move quicker depending on the particulars of the case as well as if you are a previous bankruptcy filer. Additionally the filing of a Bankruptcy to simply with the intent to delay creditors is a violation of the law. You should contact an Attorney experienced in Bankruptcy & foreclosure to determine your options. Contact The Law Offices Of R.J.Atkinson,LLC to see how filing a Chapter 7 Bankruptcy may affect your foreclosure.
http://rjabankruptcy.com/articles/bankruptcyandforeclosure.html
Bankruptcy & Foreclosure in Texas
Sometimes Bankruptcy & Foreclosure in Texas go hand in hand. Many people in Texas file for Bankruptcy to Stop Foreclosure. When people are facing foreclosure it can be very stressful time and filing Bankruptcy may not only Stop Foreclosure but allow you to regain control of your finances as well as your peace of mind.
Foreclosure in Texas a legal process by which a bank, financial institution, mortgage company or lender can terminate or end your legal right or other interest in your home or other real property. This usually occurs after you have fallen behind on your mortgage payments or property taxes. At a foreclosure sale, the bank, financial institution, taxing authority, mortgage company or lender may sell your real property on the courthouse steps at a foreclosure sale to satisfy the secured debt as well as the legal costs involved in the foreclosure process.
Just because you owe them money and may be behind on your payments, a mortgage company, taxing authority or bank cannot just go to you house, throw you out and change the locks. There is a legal process that must be adhered to and the creditors must follow the rules within their legal rights to do so. Remember that you have legal rights and you may be eligible to exercise those rights under the Bankruptcy Code to stop the foreclosure and save your Texas home or real property. It is extremely important to exercise your rights prior to the foreclosure sale.
If you are facing foreclosure in Texas and want to save your home or property, and Stop the Foreclosure we may be able to help. The Law Offices of R.J.Atkinson,LLC has helped over 1500 people file for Bankruptcy Relief.
http://rjabankruptcy.com/articles/bankruptcyandforeclosure.html
Foreclosure in Texas a legal process by which a bank, financial institution, mortgage company or lender can terminate or end your legal right or other interest in your home or other real property. This usually occurs after you have fallen behind on your mortgage payments or property taxes. At a foreclosure sale, the bank, financial institution, taxing authority, mortgage company or lender may sell your real property on the courthouse steps at a foreclosure sale to satisfy the secured debt as well as the legal costs involved in the foreclosure process.
Just because you owe them money and may be behind on your payments, a mortgage company, taxing authority or bank cannot just go to you house, throw you out and change the locks. There is a legal process that must be adhered to and the creditors must follow the rules within their legal rights to do so. Remember that you have legal rights and you may be eligible to exercise those rights under the Bankruptcy Code to stop the foreclosure and save your Texas home or real property. It is extremely important to exercise your rights prior to the foreclosure sale.
If you are facing foreclosure in Texas and want to save your home or property, and Stop the Foreclosure we may be able to help. The Law Offices of R.J.Atkinson,LLC has helped over 1500 people file for Bankruptcy Relief.
http://rjabankruptcy.com/articles/bankruptcyandforeclosure.html
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