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Posts Tagged ‘Los Angeles Bankruptcy Attorney’

The best form of Loan Modification may not be a Loan Modification at all!

Friday, March 18th, 2011

In California, consumer bankruptcies rose 25% in 2010 and were up 9% nationwide. There were 24,117 consumer bankruptcy filings here in the Santa Ana division of the Central District of California…and that was just in the first quarter of 2010! The majority of those were Chapter 7 filings to liquidate assets and eliminate unsecured debts.

What should be of great interest, especially here in South Orange County is the growth seen in Chapter 13 and consumer Chapter 11 bankruptcy filings. In both of these, the consumers typically are able to keep their homes, eliminate their junior mortgages (i.e. 2nd, 3rd, and 4th mortgages) entirely, and even reduce the amount owed on other secured debts. When an individual does not qualify for Chapter 13, they often consider a Chapter 11 bankruptcy.  For example, if a debtor’s secured debt exceeds $1,081,000 and/or combined unsecured debt exceeds $360,475, and the debtor wishes to keep delinquent assets, the only viable bankruptcy recourse would be to file for Chapter 11 bankruptcy protection.

Here is how it works: years ago, when home values were at their height, home owners used the equity in their home(s) to borrow against. They took out second mortgages, third mortgages, and even fourth mortgages. Those mortgages were secured by the equity in the home. But today, one in four California homeowners is upside down (where the liens against a property exceed the value of the property).  In many cases, debtors can completely eliminate junior liens either in a Chapter 13 or Chapter 11 Bankruptcy!

For most individuals and families, eliminating their junior mortgages and creating an affordable three to five year repayment plan on their debt is better than anything possibly achieved through a loan modification. Consumers are able to get caught up on delinquent mortgage payments and eliminate their junior mortgages upon the completion of their Chapter 11 or 13 plan. Consumers then walk away from their plan, free of all unsecured debts and their second mortgages in some cases. It truly represents a fresh start.

The great news is that by using this plan, it is possible to stay in your home while paying only a percentage of your unsecured debt even though you may be making less than you did several years ago.

The only shame is that most people who qualify for this type of bankruptcy don’t even know it exists!

Stephen Doan is a partner in the San Clemente based Doan Law Firm, a father-and-five-son law practice founded on Judeo-Christian principles that strives to treat every client with unfailing honesty and compassion. Considered among the best in the nation, Doan Law Firm is California’s Largest Family of Attorneys and helps families every day improve their financial health. For more information, call 888-DOAN-LAW (888-362-6529) or visit

Nicolas Cage facing foreclosure?

Friday, February 4th, 2011

Star status won’t pay the mortgage or eliminate the need for bankruptcy!

In today’s economy it shouldn’t come as much of a surprise to find celebrities facing financial problems and bankruptcy. But you have to wonder, just how does Nicolas Cage get behind on his mortgage payments? I suppose he does it the same way most Americans do it…just on a larger scale.

According to John Anderson, owner of Twin Oaks Realty in Minneapolis and a National Association of Realtors expert in foreclosures, “There are many among the rich and famous who couldn’t keep up when the rates on their adjustable rate mortgages shot up. Price drops at the high end of the market were so steep that a sale wouldn’t cover the debt. In other words, high-end homeowners face the same problems that plague the rest of us. “

And what can they do about it? They could consider short selling their home(s), and depending upon circumstances, they may consider bankruptcy. Since a Chapter 13 limits secured debt at $1,081,400, some high roller debtors need to consider a Chapter 11, which sometimes referred to as a jumbo 13. Using a Chapter 11, the debtor may be able to keep the house(s) but could conceivably eliminate second, third and even fourth mortgages which is not an option in Chapter 7 cases.

So, what is Mr. Cage’s situation? According to in November 2009, Cage lost two New Orleans homes — one in the French Quarter, the other in the Garden District — worth a combined $6.8 million, according to a report. Cage was behind $5.5 million in mortgage payments, and he owed $151,730 in property taxes to the city of New Orleans. Regions Bank paid $4.5 million for the properties.

I don’t know about you but it sure makes me feel better about spending $10 to $15 for a movie ticket knowing I can help keep these guys’ homes out of foreclosure. You think we should start a special fund for them? 

Ask Doan Law Firm: How Will Bankruptcy Affect My Credit?

Wednesday, December 15th, 2010

For the bulk of people contemplating bankruptcy, their credit has already been severely damaged.  Each creditor reporting negatively every month takes a heavy toll on a credit score.  For clients whose credit score is still standing, they’ve been engaging in expensive juggling that takes a personal toll.

Bankruptcy stops the constant negative reporting so the positive ones can take an effect.  So while it has a dramatic effect, it allows credit to recover.

Once your bankruptcy is discharged, you will immediately be offered low balance secured credit cards.  Using those cards will begin to rack up positive points on your credit.  Also helpful are payments on any house or car you keep through bankruptcy.

After bankruptcy your credit will recover and build much more quickly than when you were just starting out.  FHA regulations permit lending two years after a bankruptcy.  With very little effort, your credit will recover quickly.

Chapter 11, Not Just for Airlines Anymore

Monday, November 1st, 2010

For a business that is profitable, but cannot meet cash flow obligations, Chapter 11 is a lifesaver.  Essentially, in a Chapter 11, the business continues to operate while putting all its creditors on hold via the automatic stay.  Management proposes a plan to reorganize the company and pay its debts.  The court has the power to modify or cancel contracts and leases to make the plan work.

Some say Chapter 11 gives businesses an unfair advantage because the business continues to compete with other companies while getting a pass on debt, but the long and short is that Chapter 11 retains assets and saves jobs.

Chapter 11 isn’t only for businesses, but can work well for individuals.  Chapter 11 is more complicated and expensive than a Chapter 7 or 13, but there some creative things can be done in an 11 that aren’t available in the other 2 chapters.

If you think Chapter 11 might hold the answer for you or your business, call Doan Law Firm for a free consultation today.

Can I keep my house in bankruptcy? Another exciting installment of “Ask Doan Law Firm” (Part 1).

Wednesday, September 29th, 2010

Q:  Can I keep my house in bankruptcy?

A:  As with most bankruptcy questions, the answer is a hearty, “it depends”.  Let’s narrow it down a bit.

The day you file a Chapter 7 bankruptcy, you receive an automatic stay.  The automatic stay prevents any creditor from taking any action against you.  This means your mortgage company, cannot foreclose no matter where they were in the process.  In your bankruptcy petition (paperwork) you indicate if you plan to surrender the home or keep it.  In bankruptcy, the general rule is if you keep the asset you keep the debt.

If you are current on your mortgage payments, you can continue to make those payments and take the house through the bankruptcy, paying all the way.  If you are not current, you need a plan that will get you current.  The key is usually in the automatic stay.  As we mentioned, when you file, every one of your creditors must stop all collection action.  You won’t be paying your credit cards and wage garnishments and bank levies will stop.  That can give you just the breathing room you need to catch-up your home.  Some clients borrow the back amount from a family member or friend.  If the house makes sense once you jettison all the other debt, it can be a good idea to borrow to catch up the back payments.

The reason you need a plan for bringing your house current and a time frame on the plan is that the bank can potentially file a Motion for Relief from Stay.  When you file bankruptcy, the bank has two options, (i) wait for the bankruptcy to be complete and proceed with the foreclosure; or (ii) file a Motion for Relief from Stay asking the court to allow them to proceed with the foreclosure.  There’s no way to predict which path the bank will take.  On one hand, if you’re not going to bring the house current, the bank wants the property.  On the other hand, it will take about 2 months for the court to hear a Motion for Relief from Stay and the bank knows the bankruptcy will be complete in about 6 months.  A Motion for Relief from Stay costs the bank attorney and filing fees, so they may decide to wait.

Another important thing to note at this juncture is that if you keep the asset (house) and keep the debt (mortgage), you keep the debt as it is.  The bankruptcy court doesn’t have the power to modify a home loan.  There’s been some discussion among the powers-that-be about grating the court that power, but for now they don’t have it.  If you keep the house, it will be with the current mortgage.  You do still, however, have the right to continue to engage in any loan modification discussions with the bank.

In the next post we will look at keeping your home in a Chapter 13 bankruptcy.

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